By David Ljunggren
OTTAWA, Aug 7 (Reuters) - Canada and the U.S. are discussing a prospective deal in which Ottawa would tackle a list of Trump administration trade demands in exchange for Washington scrapping a threat to impose new tariffs, a source familiar with the talks said on Friday.
Trump slapped tariffs on a range of Canadian imports after returning to power last year and in July unveiled 50% tariffs on a wide range of imports to take effect on August 19 unless Ottawa tackled U.S. grievances.
The Globe and Mail was the first to report the concessions Canada was prepared to make.
As part of the proposed deal, Canada would remove tariffs on U.S. autos, reach agreement on the U.S. interpretation of how dairy quotas should be allocated and seek the return of American alcohol to store shelves in major Canadian provinces.
In exchange, the U.S. side would reduce existing tariffs on Canadian steel and aluminum, said the source, who requested anonymity because of the extreme sensitivity of the situation.
There is no guarantee the two sides will reach a deal, said the source. One challenge for Ottawa is that it cannot order American alcohol back onto the shelves, since the matter is the responsibility of the provinces.
Canada told the United States that unless the two sides reached a deal to stave off the tariffs, Ottawa's ability to continue talking would be constrained by public anger and potential further retaliation by the provinces, said the source.
Any side agreements to deal with the potential new tariffs would be part of a larger review of the tripartite United States-Mexico-Canada trade pact which was due to have been completed but now looks to drag into next year.
The office of Canadian Federal Minister Dominic LeBlanc, who is in charge of U.S.-Canada trade relations, declined to comment. The office of U.S. Trade Representative Jamieson Greer also declined to comment.
Canadian officials had a "constructive and detailed meeting" with Greer on Thursday, said LeBlanc. The source said the two sides were set to meet every day until August 19.
Relations between Canada and the U.S. have been fraught since Trump returned to the White House last year, imposing tariffs and calling for the annexation of Canada.
(Additional reporting by Kanjyik Ghosh in Barcelona;Editing by Nick Zieminski, Rod Nickel and Daniel Wallis)
