By Promit Mukherjee and Maria Cheng
OTTAWA, Aug 18 (Reuters) - Prime Minister Mark Carney spoke with U.S. President Donald Trump on Monday, Carney's office said, as Canada tries to hash out a last-minute deal to avert new 50% tariffs from taking effect at midnight on Wednesday.
Existing U.S. auto tariffs remained a sticking point, two industry sources familiar with the talks said.
The new U.S. tariffs would cover about $20 billion worth of imports and apply regardless of whether Canadian goods qualify
for preferential treatment under the U.S.-Mexico-Canada trade agreement, which has shielded much of Canadian industry from earlier U.S. tariffs.
“Prime Minister Carney and President Trump spoke on the phone yesterday afternoon about the ongoing trade negotiations,” Carney's office said on Tuesday, without sharing further details.
BILLIONS OF DOLLARS AT STAKE: BUSINESS GROUP
Trade experts and industry officials say the new tariffs could lead to job losses and business closures in vulnerable sectors including lumber, wine and dairy, while weakening protections for Canadian exporters under the continental trade pact. They also warn the dispute could complicate broader USMCA negotiations.
"There are billions in goods per year that were not impacted before, but now are at risk of being impacted significantly," said Candace Laing, CEO of the Canadian Chamber of Commerce.
"Business have been doing a high-wire act for well over a year, holding off on hiring, investment and growing in Canada," she said.
Canada's minister responsible for U.S. trade, Dominic LeBlanc, and chief trade negotiator Janice Charette have been in Washington since last week for talks with U.S. officials.
LeBlanc's office did not immediately comment on whether the minister would hold another meeting on Tuesday or on the state of the talks.
On Monday, the Canadian officials met for nearly two hours with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.
Greer has repeatedly cited Canada's tariffs that followed initial U.S. tariffs, some provinces' refusal to stock U.S. liquor and Canada's dairy supply management system among U.S. grievances.
Two sources said one of the main sticking points was U.S. tariffs on Canadian vehicles.
The two sides have discussed cutting U.S. Section 232 tariffs on Canadian vehicles to 15% from 25%, with further reductions based on the amount of U.S. content in each vehicle, the sources said. A point of contention has been how that content should be calculated. Washington wants only U.S.-made content deducted from the tariff calculation, in line with its current approach, while Canada is pushing for all North American content, including Canadian and Mexican parts, to be excluded, the sources said.
A Canadian government source said last week that all options remained on the table if the new tariffs take effect, including government support for affected domestic industries and a possible suspension of bilateral trade talks, but the source expressed hope that the U.S. was keen to reach a deal.
(Reporting by Promit Mukherjee and Maria Cheng in OttawaEditing by Rod Nickel)
