Front Burner - Carney's big challenge as Canada-U.S. trade deal nears

Episode Date: August 21, 2026

On Thursday, Canadian trade representatives were in Washington for more talks amid a tentative trade deal with the U.S. Coming out of the meeting, Canada-U.S. Trade Minister Dominic LeBlanc said that they were "very close" to reaching an agreement.Today, CBC senior parliamentary writer Aaron Wherry and Abacus Data CEO David Coletto are here to parse through what we know so far about the impending trade deal and talk about the political test Prime Minister Mark Carney will face in defending it. For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

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Hey, everybody, Jamie here. Today on the show, we're going to parse through what we know about the impending trade deal between Canada and the U.S. And talk about the challenges the Prime Minister will face and selling it to Canadians. And we're going to do that with senior parliamentary reporter Aaron Wary and CEO of Abakistada, David Coletto. They are two of the most thoughtful people that I know. Last year on election night, I actually did what I think was a six-hour live stream. And then a 2 a.m. podcast with these guys. And they were shockingly coherent by the end of it. So no pressure guys. Not like this is a big story or anything. Thank you very much for being here. Okay, on yesterday's show, I mentioned that we postponed this episode until today because we wanted more details from this deal that we could actually grab onto. We have some of those now.

We're talking at 4.15 p.m. on Thursday. And Aaron, I do think it is probably fair to say off the top that the president's late night announcement Tuesday that there was a deal with Canada was to be diplomatic, kind of premature. And perhaps that is why just some details have been coming out in drips, hey? Yeah, I think he was perhaps slightly over-eager or at least optimistic maybe. You know, I think in a more genteel time in history, what you would have had happened here is both sides say something like, because of progress at the negotiating table, we have decided to extend negotiations for three more days. and then everyone would have gone back in the room and continued negotiating. And at some point when both sides were happy with everything that was on paper, they would have both announced that they had come to a deal. Or I guess, as it were, maybe not come to a deal.

But there would have been some kind of joint announcement. And instead, in this case, we got the extension, but the extension couched, as you say, from Donald Trump in the sense of basically we're just, you know, finishing up the paperwork. We're going to give a few more days to do that, but we've got a deal. That was the American description of things. Then you had the Canadian description of things, which was, you know, we're making progress. We've made advances. We're going to continue working towards a deal.

And so we've now spent, you know, the last 48 hours kind of trying to part. or chase down to what degree there is a deal, what has been agreed to, what hasn't been agreed to, what's clear, what's not, how close are the two sides to actually getting to something. And that has led to this kind of weird world where we're talking about a deal that that sort of may or may not quite exist. Maybe worth mentioning here that Dominic LeBlanc, Canada's Minister of Canada-U.S. trade, went back to Ottawa from Washington on Wednesday and then return to Washington on Thursday for what was supposed to be a relatively short meeting with U.S. Trade Rep. Jameson Greer. And instead, it seems to have gone on for hours. He's just kind of emerged from it. And he said,

Canadians expect us to get a deal that's in the economic interest of Canada and Canadian workers. We're very close. We continue to make progress. and we're going to stay here and do the work that's necessary until we get to that point. Do you read that as a positive sign? I do. I think, you know, they're still talking and he went back, and I think that's a signal that we're probably close to one. You know, without having ever been inside the rooms like this or knowing what the government's doing, it does feel like the last few days have been like that period where they have the specifics,

and they're trying to gauge can they get this approved, not by the president of the United States, but by the public and the premiers, right? The premiers are like the focus group. I'm a researcher, so I'm thinking like the premiers or the focus group, you're going to get good qualitative feedback. And then maybe, I don't know, they're doing some rapid polling just to get a sense of

whatever specifics they have landed, how would the public react? And so I don't know if that's what's actually happening, but it does feel like we are getting, closer to something that both sides are going to feel good about announcing. That's a pretty good segue. I think for us to get into what it is that we do know and how the premiers right react and also how Canadians might react.

Aaron, we know that the prime minister has asked the premiers to put booze back on the shelves. Once a deal is reached, Nova Scotia's Premier Tim Houston said that he would comply with that. It's something that I would be willing to do for the prime minister at this point in time. But we have not gotten the same reaction from other premiers, right? I'm thinking about Quebec's Premier Christine Frischett, for example. Just talk to me about what's happening there. What is it that she is so concerned about?

Yeah, Christine Frischett's statements on this have been pretty interesting. Her initial statement after the Prime Minister spoke to the premier's late yesterday afternoon was to say essentially she still had more questions and she needed those questions. answered. When I get all the information, the additional information, I will be able to decide if it's a good agreement or not for Quebec. She suggested that the negotiations were not quite really over. Then this morning she had what seems to have been a long call with the Prime Minister again. She says she got some answers. So we are now analyzing the answers he gave me and analyzing the impact. on Quebec's economy. And we will decide afterwards what's our position.

And if... The Quebec side isn't quite sure how it feels about those answers. It wants to do further analysis. I think that speaks to, you know, a number of things. One is how sort of fluid the conversation still might be behind closed doors in terms of the details of this deal, but also the different pressures and the different ways this is going to impact different provinces and different sectors. And for Quebec, you would assume that the real point of pressure,

the real thing she's concerned about is supply management, particularly in the dairy sector. And there have been sort of hard to read tea leaves on this in terms of what exactly is up for negotiation or what may be part of a deal. We know that the United States has a fairly longstanding objection to Canada's supply management dairy sector and how it impacts American farmers' ability to import milk into Canada. But at the same time, we know that coming out of some of the preliminary discussions or at least discussions in the last few days that Dominic LeBlanc, the federal minister has come out and said, the prime minister was very clear. We needed to protect supply management. We needed to ensure that the supply management regime remained entirely intact. And I'm

confident that that's the case. It's hard to know what that means exactly how how these pieces fit together, but that's, I suspect, what Quebec is concerned about and isn't, you know, necessarily going to want to come out in support of this deal until it knows, I think to David's point, that it's, it's that whatever the Canadian government's going to agree to is something that the dairy sector and dairy farmers in Quebec are going to be satisfied with. You know, if I was For Chette, I would be certainly alarmed by some of the stuff coming out of the U.S. I mean, we heard Donald Trump say. Tariffs will be non-existent for our farmers.

Our farmers were paying tremendous tariffs into Canada, and those tariffs are going to be totally eviscerated, down to zero. I don't know what he was talking about there, but right now there are lots of very large tariffs that kick in on dairy products coming in from the U.S. passed the quota and tight controls on where those products can be sold. I think since then, other factions in the U.S. government are saying that American agricultural exports doesn't necessarily mean dairy products, but also in the presidential proclamation, Canada, it did say that Canada was conceding on those three big irritants

spurring the 3-38 tariffs, one of which is dairy, right? So we're really going to have to kind of wait and see what's on the table there. leading up to this deadline this week, David, we were hearing that auto was a big sticking point in the talks as well. We actually have some pretty well-sourced info about what the two sides have agreed to when it has come to autos. And it is that the U.S. has agreed to lower their tariff rate on Canadian-made vehicles to 15%, that is down from 25%. And then when you can take into account American-made parts, the actual rate in practice would be half that. a 7.5% tariff rate. I know industries were discussing what they could and couldn't live with. A 7.5 effective tariff rate on autos is what to them? David, bad, something that they could live with.

Well, it's better. But I, you know, we heard from Blavio Volpe is the president of the automotive parts of many manufacturers association. He basically said, look, most automakers have a profit margin of about 6%. So, you know, even if it's a 7.5%, tariff, that's going to shrink that margin pretty much of its entirety. So better, but still a real problem for anyone who wants to make a profitable car in Canada if these tariffs, you know, and so many of the cars we make here are sold back in the United States, it becomes a real problem. And I think this is, this is the second part of whatever deal comes out of this. And it relates to dairy, it's autos, it's government will, our government will have to figure out

how the government's going to help and protect those sectors and whether they have the political will to do it. And I think, you know, just as dairy is an essential part of the identity of Quebec and oil and gas is one of Alberta, autos is one that Ontarians, to be southern Ontario, are very important to their well-being. Something is happening in Dawson Creek. A wave of violence has swept over this community of just 13,000 people. 15 murders in the last five years. I'm Timothy Sawa and from CBC's Uncover and the Fifth Estate,

an investigation into deaths and disappearances in Dawson Creek and what's behind it all. The Mile Zero murders, available now on CBC Listen or wherever you get your podcasts. Quebec's premier, Fischet, is saying that, you know, ultimately it will be her decision and Quebec's decision, whether they put booze back on the shelves. We haven't heard yet from Doug Ford, if I'm right, Is that right? That's correct. Yeah, why do you think that is, either of you?

I mean, I think it probably speaks to how much is in flux right now. You know, this is, again, very speculative. But I imagine that Doug Ford isn't going to want to come out and say anything until he feels like he can say he's okay with what they've agreed to and he's ready to put American alcohol back on the shelves. It's kind of remarkable that it's come down to. this question of alcohol sales, that it has become such a focal point. But it kind of speaks to a couple pretty interesting things. One is that all of the so-called alcohol bans are all at the provincial level. So technically, officially, legally, the decision of whether to put American alcohol back on shelves is all going to come down to these different premiers. For some

premiers, that might be somewhat of an easy decision. We've already seen Alberta and Saskatchewan put it back on shelves previously. But for other premiers, the issues are all different, right? In BC, it's the forestry sector and solved with lumber. So, you know, David E.B., can he put alcohol back on the shelves in the shelves in BC without some kind of move in that respect? In Ontario, it's the auto sector. Can Doug Ford put alcohol back on the shelves unless there's some kind of deal on auto. In Quebec, as we said, it's supply management. And so it speaks to how much Mark Carney has to, you know, think about not leaving any premier in a position where they're going to look bad as much as possible. I think one of the big questions coming, looming over

all of this is whether there would be any movement over softwood lumber, which is an issue that predates Donald Trump by many years. And so, you know, there may be some provinces that don't get what they want, but can you get to a place where most of them can claim some kind of victory and some reason for backing down on this alcohol question? Right, because we haven't heard anything yet about softwood lumber. We've heard that the U.S. tariffs on Canadian steel and aluminum are being lowered from 50 to 25 percent reportedly. This is, I'm sure, somewhat of a relief, though our colleague Peter Armstrong pointed out earlier this week, the aluminum sector has been pretty resilient, but no word yet on software lumber.

You know, since we're on the topic of premiers, Bob Canoe, the Premier of Manitoba, did come out today, saying that he would put booze back on the shelves, but that people shouldn't buy it. What I would say to Canadians is leave it there. If we put the booze back on the shelves, don't buy it, let it sit on the shelf, where the liquor mart employees will be putting it,

and buy the Canadian stuff instead. We've done an amazing job sticking together in the face of Donald Trump's tariff threats, and I think we should continue to do that. He went on, and he really kind of leaned into Trump. You know, very wise people have said you can't get a good deal with a bad person. And I think that rule applies here. I mean, you know, President Trump is the reason we're all paying so much at the gas pump right now

because of his misguided war in Iran. And I could go on and on and on about the Epstein files, and you know that I will. But realistically, this is a situation that we're in as Canadians. So we still have agency. We can still make the choice. We can still say Crown Royal is better than Jack Daniels. He talked about how America is weak

and he thinks Canadians should fight. I mean, Canadians may love this from him, right? But David, like, could you also see this as a problem right now for, you know, a prime minister who's trying to sign a deal imminently? I think so. I mean, this is the problem when you are negotiating and also putting on theater, right? Like that is amazing theater that premier canoe put out there. And I think most Canadians, if I showed that clip, would agree with him and and cheer him. But, you know, that gets down to the president and his team. And, you know, maybe Doug Ford goes from being the most

irritating Canadian Premier to the Trump administration to maybe Mr. Canoe. And I don't think it helps. And this is the problem. This is the problem with this issue is that normally trade issues happen behind closed doors. Public's not engaged. They're not paying attention. They don't have an emotional stake in it. They care to some extent, but they don't care about the details. And so you can do those hard things without having to express the kinds of things that Premier Canoe said. That's not happening here. And it's this is even more. more so than the last time we were in these negotiations in 2018. So I don't think it's going to be helpful.

The question is, does this clip play on Fox News or get in front of the president? And I think we'll love to see about that. Just before we move on to some of the bigger picture questions and to public sentiment, I just, Aaron, this deal is really being framed as doing a bunch of stuff all at once, averting the new tariffs, some relief on the older sectoral tariffs we have been dealing with, but not complete relief. But there's also other stuff that seems like it is wrapped up in here as well. Jameson Greer talked about economic security and digital security. I realize this question, like a few others that we've been going through today, will require a level of speculation.

But what else could potentially be included in this deal as more information comes out in the coming days. So a couple things have come up. One is this question really raised and put front and center by the president of Keystone XL, the pipeline that was abandoned many years ago and the saga has gone on for many years now. He, I'm sure people have seen it now, this AI generated image. He posted of seemingly him digging Keystone, I guess, out of its grave that Joe Biden had put it in. Buried by Biden, I believe it says on the gravestone. Yes. Yes. I think there was also a sign that said like the pipeline would be completely free or something. It's very unclear what that means. It's very unclear like what how this would fit into it into a trade deal at all. Like none of the

obstacles, none of the legal or political obstacles to this pipeline were on the Canadian side of the border. It's always been an American issue. So it's unclear what, or, or, or, or, or, or at all how it fits into this. The other thing that has come up is Justin Ling at the Toronto Star has just reported shortly ago before we're recording this, that the Online News Act, this legislation that attempted to force major tech companies to compensate journalism, media outlets, that that legislation that was passed in the Trudeau era, Justin Trudeau's government passed it, would, that that could be, sacrifice. We know it's an it's it's an it's a an irritant. We know that the the American government has consistently objected to Canadian attempts to at all regulate the the major tech giants,

the major American based tech giants. They obviously objected previously to the digital services tax with which the county government decided to abandon. So there's all sorts of things like that that are kind of floating around this as possible points of discussion. David, you have been polling Canadians leading up to these talks and just first talk to me about the public opinion environment generally heading into this week and to the deadline. Whatever you think is worth mentioning here that we haven't kind of touched on. I think this is the most obvious example of a hearts and minds kind of issue, right? So on the one hand, our polling finds that almost everybody is aware of this. many of them are paying attention.

So again, this is not a typical kind of trade issue. This has engaged most of the Canadian public. On the mind side, people believe that if these tariffs, these 50% tariffs take effect, it would have a real negative effect on our macro economy. Some believe it will affect their own personal household finances, and it will create a lot of uncertainty about what it means for the Canadian economy. So there's a real understanding that, you know, this may hurt and it could hurt and it will hurt. On the other hand, the heart side is that there's still resistance to the idea that we've got to get a deal no matter what.

And this has been the back and forth that we've seen throughout this entire moment since Donald Trump became President of the United States, that the emotional side that is so animating so many Canadians, whether it was during the federal election or whether all the, way to today is that 55% of Canadians say, look, I think we need to maybe even consider moving on beyond Coosma, let alone this situation, this deal. But there's no consensus. And this is the challenge for the government. There's no consensus on what the public at least believes they should do today. 18% think we should make concessions, 36% more than double that, think we should retaliate if they don't take them away. And then the rest say, let's just keep negotiating. And So I think that this is a really difficult issue because the instinct of most people, and particularly politically, for liberal supporters, is they do not at all trust Donald Trump.

They don't like him. They don't want to reward him. And they believe that while Mark Carney is the best person to handle this situation, I don't think they want to come back and hear that we had to make some big concessions in order to get a few percent, you know, not a few percentage points, significant percentage points lifted on some sectoral tariffs, and we are still going to negotiate Kuzma, and we don't know what that deal looks like yet. What kind of test do you think the next week will be for Carney?

David, why don't you go first by? I'd like to hear from both of you on this. Yeah, I think it's a big test. I think this is the moment that, like, his prime, you know, prime ministership was really built around was, you know, he won because Donald Trump won. And he won because, not necessarily because I think most people voted for him, thought he would get a deal that had no tariffs or was exactly like it was under Kuzma, but that he would do what he could to navigate the country through this moment.

And his own rhetoric, I think, created the environment where you have a majority of Canadians who say maybe Kuzma, maybe a trade deal with the United States is not actually what we should do. And so if he's, if there's urgency to get a deal, because he believes, that these tariffs would have a materially significant negative effect on the country, he's going to have to explain why that's the case, because I think many Canadians don't believe that's the case. Aaron, you want to jump in here? Yeah, I think it's a test, I mean, on many fronts, but I'll single out a couple.

One is how well he can bring the affected sectors and the affected provinces along. in the case of the Trudeau government negotiating with the Trump administration over Kuzma, you know, it's my impression that it was quite literally a major auto sector figure was, I think, maybe even in the building, you know, and they were going back to that person and saying, like, okay, what's a number in terms of, I can't remember exactly what part of it was, but what's a number that works for you? And then going back to the Trump administration and trying to get that number. And so I think, so how well have they done the work of bringing everyone along? The second piece of it is, I think to what Davis is, which I think is really important and really interesting, is talking about how it's emotional.

And I don't use that in a pejorative sense. Like, I think that's a real reaction people have and I don't think it's unjustified. And I think it's interesting because it's something that Tim Houston, the premier of Nova Scotia mentioned, that there had been a very, emotional reaction to this moment. And I think the emotional reaction, as David says, I think that's that it goes to why are we making concessions? Why are we giving in anything to this guy? Let's just fight. And so I think Mark Carney is going to have to manage that. And if if there's a deal, explain why it's the most rational deal, why it was a reasonable thing to do. And probably deal with that question of, okay, but what about elbows up? What about not being the 51st state? What about

going our own way? How does that fit into what you just agreed to? You know, the Star had a liberal source quoted in a piece saying that the Canadian government had to be pragmatic here in these talks, because Ottawa is on track for more comprehensive CUSM talks moving forward, right? And you don't want things, I guess, to fall off a cliff, right? You need to keep things moving. But Andrew Coyne, a columnist for the Globe of Mail and X today, question whether any concessions Canada is making now is setting us up to make more concessions. And will we be doing this year after year now since the U.S. refuses to renew QS. for any real period of time? Just talk to me more about how you both see that tightrope that this government is walking, right? Because, you know,

this impending deal, it's certainly not the end here. David, do you want to take it first? I think what we've clearly learned from both the fact that we're reviewing Kuzma and everything that's happened since Donald Trump returned to the White House is that any deal with Trump is a ceasefire and not a peace treaty. I think Iran is also, I mean, in other things, it's not just in trade, but in all things, that these things are not, we can't. can't consider them, not even just permanent, but even something that will last a long time.

And so I think both things can be true, right? Falling off a cliff is worse than a bad deal. And the cliff gets rebuilt every few years. But at some point, you know, Carney has to sell a deal that buys time without pretending it buys certainty. And that's the biggest challenge I think he faces because everybody knows. Almost every Canadian would tell me in a poll that even if he announces something this week that this is

most people will say well but when is the next provocation going to come and that's something we're just going to have to live with and maybe that's what actually buys Carney the space Aaron final word to you pal yeah I think you know Corey tonight the conservative

strategist has this very colorful way of putting it when he says that you know these trade negotiations and this uncertainty it's not a cold it's like a chronic disease it's diabetes we're going to be dealing with this for years. And I think that's something that, you know, I think it's possible that the Canadian public actually has sort of internalized that. As David says, when you ask people whether they expect Donald Trump to stand by any deal you make with them, they all say no.

I think, so I think there's a certain sense of, okay, this, we're in this for the long haul. I think the risk, the long-term risk, and I think, you know, you mentioned Andrew Quinn, And I think that I've sort of had the same thought of like, do you risk seeming to get into a doom loop here of new threats and new concessions? And is there any way for Mark Carney to sort of reassure people that that's not the cycle we're stuck in? You know, his argument, I'm sure, would be, well, that's why we're, you know, doing all these other things in terms of infrastructure and major projects to build Canada's resiliency. And I'm not saying there's nothing to that argument, but I do wonder whether there's something that's lurking in the background and in the minds of people when they don't want to make concessions, whether it's at some point we have to say we're not making any more concessions. And I don't know whether that's reasonable or realistic, but I do think that's an idea that it would be interesting to see Mark Carney sort of publicly address or wrestle with. Okay.

Guys, this was great. Thank you so much for doing this. Really, really appreciate it. Thanks. My pleasure. Thanks. All right. That is all for today. Front burner was produced this week by Joythe Shen Gupta, Matthew Amha, Kevin Sexton, Cecilia Armstrong, Sam McNulty, and Mackenzie Cameron. Our YouTube producer is John Lee. Our music is by Joseph Shabison. Our senior producers are Lane Chow and Imogen Burchard. I'm Jamie Poisson. Thank you so much for listening and we'll see you next week. cBC podcasts, go to cBC.ca.ca slash podcasts.