Front Burner - New U.S. tariffs paused – for now. How did we get here?

Episode Date: August 19, 2026

Late Tuesday night, U.S. President Donald Trump announced he would pause the implementation of the 50 per cent tariffs on a range of Canadian goods for three days, saying the two countries had reached a tentative agreement. Shortly after, Prime Minister Mark Carney put out a statement that read, in part: "Substantial progress has been made, although there is important work still to be done."Host Jayme Poisson spoke to senior business correspondent Peter Armstrong earlier in the night, before the announcement, about the complexity of the negotiations, the challenges in getting a deal, and the uncertainty inherent to any deal with this U.S. administration.As of Tuesday evening, there was no deal in sight to avoid a new set of tariffs threatened by Washington on roughly $30 billion dollars’ worth of Canadian goods. CBC senior business correspondent Peter Armstrong on what this could mean for Canada’s economy in the days to come.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts 

Between tariffs, trade battles, and an ongoing war in the Middle East, the lazy days of summer seem to have skipped Washington this year. So our podcast, Two Blocks from the White House, is here to keep you caught up, even if you're in vacation mode. Join me, Katie Simpson with correspondence Paul Hunter and Willie Lowry and other journalists from our D.C. Bureau for a front row seat and what this all means for Canadians. Find and follow two blocks from the White House with new episodes every Wednesday in your favorite podcast app, including YouTube.

This is a CBC podcast. Hi, everybody, Jamie here. So just as I was going to bed, U.S. President Donald Trump announced that he was pausing the implementation of the new tariffs for three days. He wrote, Canada and the USA, subject to the finalization of documents, have a deal. It's not yet clear what is in that deal will be on it in the coming days. But what led to this moment and what is on the line is what we talked about,

and we recorded earlier tonight. So here is that conversation. All right. So Peter, I know you've been with Imogen, our producer, for the last hour or so. And she says that you keep making excited sounds. And she thinks that there's news breaking. As we're sitting here talking, I'm just staring blankly at my phone, waiting for the latest update. Well, she tells me that you've also been watching the baseball game.

Well, I have. And my J's, they're doing pretty good in Soriano's pitching. So listen, there's a lot going on right now. Yeah. Well, I guess right now is as good a time as any for us to record. It is around 8 p.m. I'm Jamie Plesson, of course. I'm with business correspondent Peter Armstrong.

And he's going to talk to me about these looming tariffs that are set to take effect in a few hours. Obviously, Peter, anything could happen overnight. This is a very unpredictable president. But what we're hearing at this point is that Carney and Trump spoke to today. There's also reporting, though, that discussions are still happening, kind of a level down with Canadian trade rep Dominic LeBlanc and U.S. trade rep Jameson Greer. So I guess the fact that they are still talking means they have something to talk about. I don't know. What do you think? Well, look, I think talking is better than not talking in every scenario. You know, I spend most of

my time talking to Canadian businesses and they are worried and they don't know what's going to happen and they don't know what this is going to mean for their businesses. And some of them are the businesses that have been hit by the tariffs that are existing, and we're hoping to get relief. Some of them are waiting and seeing that these new tariffs are hurtling towards them and are going to cause them immense pain. And they've been trying to do everything they can in the last weeks and days and now hours hoping to avert disaster. And the fact is nobody knows. And it's a really frustrating time. It's a really scary time for a lot of these businesses, especially the small and medium-sized ones, that are just going to get clobbered by these

tariffs if they come into place. Okay. And just step. back and describe for me as best you can hear what this could mean for our economy, like what kind of impact we should be bracing for here and what we're in for tariff-wise. If there is no extension and if there is no deal by midnight. So there are two sort of ways of thinking about that. One is the prospective relief that a lot of industries, sectors, and businesses were hoping for that's not going to come. And with it, the decisions they're going to have to make to whether however long this next period with tariffs is going to be, that's in one column. The other column is these new tariffs that are coming in and facing Canadian businesses.

So these new tariffs would hit 5% of Canadian exports to the United States. It's a really weird grouping, right? It goes from cement to hockey sticks to a bunch of electronic products. But it's really varied. But you can tell by looking at it that it is very specific. This was very deliberate. This was a group of products and a group of regions, Jamie, that they have decided to target to try to leverage and get the most impacting Canada without impacting much in the United States. Remember, a tariff imposed by the Americans is something that will be paid by an American importer, the business or the consumer, the household that's bringing it in.

So they need to mitigate how much this is causing pain in America. And these are causing very real pain in America, more pain in Canada, but certainly, a lot of pain in the United States as well. And that this next tranche would, the economic reports are anywhere from 0.4 to 0.6 percent hit to the Canadian GDP, which is not a ton. But remember, the Canadian economy was weak heading into this. The Canadian economy was made weaker by the first round of tariffs and all the uncertainty did probably more damage to the economy than the tariffs themselves. And this next round will have an even more sort of impact of uncertainty And so, yes, it might look from a 50,000 foot perspective, it's only 5% of Canadian exports to the U.S.

It's only a half point a GDP, but it comes at a time when we can ill afford to lose any of that. So this will have a very real impact. And where the first round of tariffs didn't hit everywhere, they don't hit evenly. So you look at Windsor, Ontario, had the highest unemployment rate in the country. Why? Because it's an automotive hub and auto tariffs hit that region very hard. You look up in northern Ontario and steel country, it's getting hit really hard. That same calculus is going to happen with this next round.

Where they hit, they will hit very hard. And am I right to say that they are going to disproportionately if they do go into effect hit Ontario and Quebec? Ontario, Quebec and BC. There's a bunch of businesses in BC this round that are going to get hit quite hard. And you look at Trevor Toome, the economist from the University of Calgary, put out a really interesting map that I can tweet out that people, listeners can go to look for. And it shows you the percentage of products exported from each province and how much these tariffs are going to hit. And it's like really concentrated in Quebec and in Ontario and in BC. And then it's like 1% in Saskatchewan and 2% in Alberta. Part of what they're

trying to do. The Americans have deliberately done this. They're trying not just to get economic leverage and cause economic pain. They're trying to cause political division. And we need to be aware of that going into this as well. Thinking about the ripple effects of this as well. Like, of course, you know, some U.S. businesses will stop buying from Canadian businesses to avoid paying this tax or they'll cut back. But also, like, I was reading the CBC interview that they did with this Alberta beekeeper who sells basically all of his honey domestically.

So you think that he would be okay, right? But he said that all of these other honey producers in the prairies suddenly can't move their product to the U.S. And so it'll flood the market here. And it'll push the price that he can get for his own honey down. Of course it will. Just if you think about, like, what this will do to individuals, like small businesses, medium-sized businesses, as you said before, all across the country.

And just coming back to the effect that this will have on the Americans, I'm thinking, too, about a few battleground states like Michigan and Maine. Republican Senator Susan Collins has talked about how intertwined Maine. economies with Canada. She told Politico a lot of our blueberries, our potatoes, our lobster, our lumber are harvested in Maine, processed in Canada and then come back. I don't want to see tariffs on the books. And I do imagine that that will have some significance if these go forward given the midterms are approaching. For sure. It is really important to remember we are feeling this pain and we are talking about it in Canada and it is front page news. It is not front page news in the

United States. So I was watching CNN for a big chunk of the day today. They didn't even talk about this deadline. But don't let that distract you from the fact that this is having an impact in the United States. And again, where the tariffs are unevenly applied in Canada, they're unevenly applied in the United States as well. So you look at Kentucky bourbon. They really feel it. Andy Bashir was out talking today, the governor of Kentucky saying we got to find a way to get our bourbon back on those store shelves in Canada. Canada is Kentucky's number one. trading partner, and they've been a good trading partner, but because he has demean them, because he has questioned their sovereignty, they've taken Kentucky bourbon off their shelves,

which hurts our economy and honestly every Canadian deserves good Kentucky bourbon. You see big pushes from the tourism boards in New York and in California and in South Carolina that are really trying to do everything they can to try to get their tourists back because they're really feeling it. It's interesting to me that the two that are having a very clear and very pointed impact and that are really getting under the skin of the administration. The two things that are really, quote unquote, working as far as that goes, are a boycott of tourism, which is not anything led by any government. It's just Canadians deciding not to do it. And the booze ban that's being done by the provinces, not the feds. And even I was talking to somebody

this week that if we got rid of the booze ban and the LCBO and all the provincial liquor commissions put booze back on the shelves tomorrow, I'm not entirely sure how many Canadians will be back to buying American booze for a long time. Right. So there are measures that Canadians will take that are different from the measures of Canadian government will take. And that is having an impact. In a lot of ways, those are the ones that are having an outsized impact, a bigger impact than the ones the Canadian government have taken so far. I mean, it has been fascinating to watch how much the booze bear seems to have gotten under the skin of American officials. And so we have three issues where Canadians have banned the sale of American wine and spirits in Canada.

You know, for everything that that we've done on the Trump Trade Administration of essentially assessing a fee on foreign goods made by foreign workers, we're not in the business of banning these things from Canada. Between tariffs, trade battles, and an ongoing war in the Middle East, the lazy days of summer seem to have skipped Washington this year. So our podcast, two blocks from the White House, is here to keep you caught up even if you're in vacation mode. Join me, Katie Simpson with correspondence Paul Hunter and Willie Lowry and other journalists from our DC Bureau for a front row seat and what this all means for Canadians.

Find and follow two blocks from the White House with new episodes every Wednesday in your favorite podcast app, including YouTube. Obviously, there's been a lot of work over the last few weeks that has been done to try and prevent these tariffs from going into place. We have both been in Washington this summer working out of the Bureau there. I was just there. I just came back. And we were watching the Canada U.S. Trade Minister, Dominic LeBlanc, and Chief Trade Negotiator, Jenna Charette, meet repeatedly with U.S. Trade Representative Jameson Greer, work through the weekends, you know, stay late. And we're hearing that they are. are, you know, speaking tonight, as I mentioned, Dominic LeBond and Greer. And I just want to talk about what these negotiations have been about, starting with the Canadian side. What has been the Canadian position going into these negotiations? What are they looking to accomplish besides the obvious, which is preventing these tariffs from going into effect? But that's a big part of it, right? Was we wanted to prevent this new tranche of tariffs from going into effect. But we also want to address the what we call the 232 tariffs, the sectoral tariffs. These are the ones that hit

steel, aluminum, copper, softwood lumber, and autos and auto parts. And each of those, I mean, Jamie, I was a reporter in Vancouver in the early 2000s and I was doing stories on the softwood lumber dispute. That one's been going on and is its own beast and is there are so many tentacles to that that it's people often say, you know, these other sectoral ones, you can kind to see a through line that connects them and softwoods off on its own. But then you start looking at autos and under this second Trump administration, autos has taken on a life of its own. So it's its own complicated beast. And then steel, when you look at how steel moves around North America, how steel from outside of North America, a lot of it coming from China, how that

influences the sort of flows of steel throughout North America is something that the American administration has been really clear in both the first term and the second term, they really want to straighten out the rules of origin around when you bring in some steel from China and you mix it with some steel from Canada. Is that Canadian steel or is that Chinese steel or how do you figure that out? They've had that as one of their main things. They want to get sorted out. And Canada needs to address that.

So that's been its own complicated thing. And then the aluminum one, I mean, Scott Lincolome, who's one of my favorite trade analysts from the Kato Institute, wrote, this amazing piece that ended up being published in Bloomberg. And it's called, we finally found it, the dumbest tariff ever. And it's a story about the aluminum tariffs and how crazy it is that the United States imposed this massive sweeping tariff on Canadian aluminum without any plan to, they don't have the capacity to make aluminum in the United States. At first, they said, well, you know what, we can just work around Canada, no problem. We'll source our aluminum from Bahrain.

We'll bring it in to the United States. But then the war in Iran ended up blowing up all of the not just the aluminum smelters and factories, but all their export capacity in Bahrain. So that dried up. And now the price of aluminum in the United States is dramatically higher than literally Jamie anywhere else in the world. So the aluminum industry in Canada is actually doing just fine because they're selling more to the Europeans. They're still selling to the Americans because they can't source it anywhere else and making the Americans pay the tariff. So like there are all these different tranches of things, these silos of things that are kind of supposed to be looked at as all one thing as we deal with what the Canadians want.

But we want those sectoral tariffs to go away. We want to avoid the imposition of these new 50% tariffs that are supposed to come into effect at midnight between the 18th and 19th. And we would like to see the conversation around getting the extension of QSMA of USMCA back on track. So those are the three things Canada wants. And just like on the American side. besides getting booze back on the shelves. Right. Just take me through what they've wanted to do here.

And then we can get into the sticking points. So that one of the interesting things, like the booze ban is, we've talked about it a couple times now, but it is an interesting thing because it was a response. Again, it came from the provinces, not the feds. It got under the skinny of the Americans. And it was one of those, well, you cannot possibly have any conversations about anything until that comes off.

And it didn't come off. And now it's one of their key points. They want the booze ban gone. Then you can kind of get into the bigger things. They want to address the rules of origin around steel. And they want to get into the rules of origin around autos, but mostly what they mean by that is auto parts. Those are their two big ones in those two sections. The dairy industry, they want to have basically, they want to have more access to Canada's dairy industry.

You've got these monster, huge dairy facilities in Wisconsin. They want to be able to sell into Canada. Right now they're not allowed to. Under the USMCA-Kuzma agreement in Trump's first term, they were finally given some access. But it was under what they call TRQ, a tariff ratio quota that basically says you can only import so much. The sticky part of that was that Canada got to decide how and where that TRQ was allocated. So if you're a big dairy product producer in Wisconsin and you want to sell your product in, you know, Quebec or Ontario, what you thought was going to happen was that you'd be able to sell at the local loblas.

That's not how we allocated it. We said you can sell your raw product to a bunch of producers in Ontario and Quebec and they'll sell loblas. And that upset the Americans. So they want to get that sorted out. And then on softwood, the softwood file, we could do like a week long series on what's going on in the softwood. And I would love to do it. Don't get me wrong. But I will try to limit myself to a few of the main sticking. points. The Americans say the Canadian softwood, the lumber industry is subsidized because they use Crownland out West. They don't, in Ontario and in New Brunswick, for example, is mostly owned by the Irving family. But out West, it's these vast tracks of Crownland. And there's been this long standing dispute between the Americans and the BC government and the Canadian government about how that should be treated and what that sort of means. And the Americans kept trying to go to courts of arbitration and trade courts and trade tribunals to say the Canadians are cheating. And all of those courts kept coming back and saying, actually, no, it's not the way you say

it is. It's a different way. It's somewhere in between to the point where right now there is $11 billion in what they call deposits, but it's a bunch of money that was technically wrongfully applied to Canadian products and is being held in a kind of escrow in the United States. And the Canadians want to get that $11 billion back. Some of the producers in BC, for example, the big ones are saying, hey, there's $11 billion on the table. We can use that to leverage. And as a point in negotiation, let the money go and we'll trade it for better access to the American market. All the small guys who say, no, I want my $11 billion back. I can use that to invest back in my mill or I can use that in my community and make my world and my business run

better. So there's disputes within between the United States and Canada about the softwood lumber dispute. There's also big disputes going on within Canadian and by that mostly the BC big players within those industries. It's super complicated, but incredibly important to both sides. And trying to find a way through this negotiation, you know, there's been rumors constantly that they're going to hive off the softwood stuff and have that as a separate conversation. The Canadian delegation, I'm told, was repeatedly telling everyone, no, no, no, we're going to keep it on the table. The Canadians kept saying there's no deal unless we have a full deal on everything. And as we get closer and closer to no deal, it'll be interesting to see how those sort of approaches begin to change in the next days and weeks and months.

Tell me more about what we know about what they were getting stuck on in these negotiations. you know, was it dairy? What concessions was Canada kind of especially unwilling to make care, et cetera, et cetera. Just talk to me more about what we know. They are being pretty tight-lipped, I should say. They are being very tight-lipped. The one that we kept hearing about through the day leading up to the deadline was that it was auto. And does that mean auto parts?

Probably they're certainly overlapping. But remember, Donald Trump wants more than anything. companies to shut down their operations in other countries and reset up shop in the United States. And he has said repeatedly he wants to see that happen with the auto industry, that he doesn't want cars made in Canada. Pete Hoxstra, the ambassador has said, well, that's just an opening salvo. Well, here we are at the end and it seems like it's still a problem. What specifically fell apart on that, I think will be one of the really important information points going forward. It's the thing that's going to tell us what we know about what the next round of talks will look like if that is, in fact, where things fell down.

But at the end of the day, I think the one that Donald Trump cares most personally about is the auto industry. And that looks like it's one of the key things where things came apart. Okay. And just when you say it's going to tell us about the next stage of this thing, like what do you mean when you say that? Eventually, we're going to have to work our way through this. And eventually there's probably going to be some kind of a tariff on all of these industries, right? The software guys, I think were, they were actually talking numbers about where they'd be comfortable. And the auto parts guys that talked about what they think would be a comfortable number.

The one that keeps coming up with the auto industry is a 25% tariff has exist now. The American said they could bring it down to like 15. But then you can offset that with 50% of the content to the auto is American. that would knock that tariff down to about seven and a half percent. And their question was, would that be doable? And if that's where we fell down, are we falling down over maybe three, maybe four points? That's what I mean about, I think, knowing where the lines were drawn and the distance between them is going to become really important to try to figure out what the next steps of this are going to be. Right, because, you know, maybe these businesses can live with a certain level of tariff, but there is a

ceiling, right? They're saying there's a ceiling where this becomes completely untenable. That's exactly it. And right now, the numbers they're talking about in terms of a tariff on Canadian auto is bigger than their profit margin. And these companies aren't, you know, they're not a charity. They're they are running for profit operations. And if they're not making a profit, they're not going to continue to operate. That's just how it goes. So they need to get that number back down to something more workable that allows them to still have a profit margin, but address whatever needs they have from the United States. Okay, so Peter, you know, as we've said throughout this conversation, here we are.

It seems kind of surreal that we would be so unsure of the details at this late hour, but at the same time, I suppose, not very surprising with this administration. I saw former Alberta Premier Jason Kenney say to our colleague that he thinks it's really important that our government and that we as regular Canadians not feed into the kind of chaos mentality that I think sometimes the president, tries to create through his art of the deal. He said, this is not the end of the world. And I just, what did you, what do you make of that kind of advice? He's entirely right.

I mean, Jamie, I have to say, I'm still very bullish on the future of the Canadian economy. And I'm still very bullish on the future of the Canada-U.S. relationship. This is a really tough period. But we're going to find a way through it. There are a bunch of factors that will sort of force everybody's hands. And Trump isn't going to be. president forever. So with that in mind, I think it is important to take a step back and figure out, like, the Canadian response needs to be really well thought through. And I'm not saying that it's

not going to be. I think the people that are in charge of that are thinking these things through day and night. And they, they are very involved. But Jason Kenney's point is, is valid. And one of the things these, this latest tranche of tariffs is aiming to do is to divide Canadians and leverage where those pain points are and make us concede where it's like everybody keeps saying, you know, no deal is better than a bad deal. And these tariffs are designed to try to test that. And, you know, the last thing I wanted to touch on that we haven't touched on yet before we go is just the reality that even if a deal is reached, like what is it worth with this administration? I think it's a really good question, and I don't have that answer. And I don't know that anybody does. But I think there had been this sense maybe that the Canadians were just waiting out until after the midterms to try to see if there was a better political environment to get a deal. And I think the Trump administration recognized that and saw its moment. And that's why we're dealing with new tariffs now. And that's why the new threats are coming. And they tried to make it unpalatable to wait.

And that's the tricky part, is how do you balance out what this deal might be worth? We spent much of the first term negotiating and hammering out the Kuzma deal that Donald Trump called the greatest and most important trade deal in the history of the world, only to have him return to office and say it's garbage and needs to be replaced and he'd like to have it removed. So it's a really tough balance. And I am glad to be talking to a podcaster rather than the prime minister about what we should do, because these are really, really tough decisions. And they're tough for the businesses.

They're tough for those industry associations that are trying to represent the businesses. And they're tough for the negotiators that are out there trying to pin down something that can work as a deal, recognizing the limits to making a deal in the era of Trump. Okay. Peter, thank you. I'm sure we'll be talking again real soon. Thank you. I'm sure we will. It's my great pleasure.

All right. That is all for today. Stay tuned tomorrow as well. We're going to have another episode about all. of this with Aaron Wary, who you all know very well, and David Coletto of Abacus Data. Thanks so much for listening. We'll talk to you tomorrow. For more CBC podcasts, go to cbc.ca.ca.coms.