Mark Carney’s cabinet wrapped a two-day retreat in the Rockies on Friday having chosen restraint over a fresh round of retaliation. The prime minister called Washington’s newest measures “relatively modest,” Trade Minister Dominic LeBlanc confirmed back-channel conversations with Jamieson Greer and Howard Lutnick are continuing, and ministers spent as much time on interprovincial trade barriers as on the American tariff wall.
Banff, Alberta, September 13, 2026 | Peacock Tariff Consulting Canada Trade Desk
Prime Minister Mark Carney’s cabinet emerged from two days of closed-door meetings in Banff, Alberta, on Friday with a strategy that can be summarized in three parts: do not escalate, keep the back channels to Washington open, and pour federal energy into the parts of the Canadian economy that Ottawa can actually control. The retreat, held against the backdrop of the most severe trade confrontation between Canada and the United States in living memory and three weeks before Alberta votes on a separation referendum, produced no new counter-tariffs and no dramatic announcements. What it produced instead was a posture, and for the businesses caught between the two governments’ measures, that posture matters.
Carney set the tone on Thursday when he arrived and was asked how Ottawa would respond to the five proclamations President Donald Trump signed on September 8, the same day Canada’s C$27.6 billion in counter-tariffs took effect. Those proclamations impose outright bans on Canadian alcohol, whey products, molasses and large motorcycles starting September 29 and reshuffle the American 50 per cent Section 338 tariff list effective September 15. The prime minister dismissed them as “relatively modest measures” when set against the Section 232 tariffs that have hammered Canadian steel, aluminum, autos and softwood lumber, and said his government was still studying the orders. According to the Associated Press, he indicated Canada might forgo immediate additional retaliation while reiterating Ottawa’s willingness to engage in respectful negotiations.
That is a meaningful shift in register from August 22, when Carney told Canadians the country was “at war” economically with its neighbour and promised to match American duties dollar for dollar. The dollar-for-dollar promise has been kept. The question ministers faced in Banff was whether to go further, and the answer, at least for now, is no.
Talks that are not talks
Canada-U.S. Trade Minister Dominic LeBlanc, speaking to reporters at the retreat on Friday, drew a careful distinction that will be familiar to anyone who has followed the file since talks collapsed on August 21. Canada, he said, is not currently in official trade negotiations with the United States. He has no meetings scheduled in Washington. But he has spoken several times with U.S. Trade Representative Jamieson Greer and sometimes with Commerce Secretary Howard Lutnick, and the conversations between officials on both sides have not stopped. The Canadian Press reported that LeBlanc stressed the importance of being ready for a possible deal that respects Canadian sovereignty and serves the national interest.
Carney made a similar point a day earlier in Calgary, where he was hosting Ukrainian President Volodymyr Zelenskyy for the announcement of a joint drone-production partnership. “I speak regularly to the president, President Trump. I’ve spoken to him in recent days,” he said, according to Agence France-Presse. “We believe there is a mutually beneficial deal for Canada and the United States.” He added that “Canada is always ready to strike a fair deal,” but repeated that he would not agree to anything that fails to serve the country’s economic interests.
The phrasing is deliberate. Carney has said talks can resume when the Americans “stop doing memes, stop throwing shade, stop trying to be tough” and become serious, a jab at Lutnick and at Trump’s habit of posting generated images of himself towering over the prime minister in hockey gear while calling him “governor.” What Banff clarified is that Ottawa is distinguishing between the noise, which it intends to ignore, and the working-level contact, which it intends to preserve. By Saturday, Trump himself was telling reporters in Dublin that a deal could come “fairly soon,” though he offered no timetable and paired the prediction with the claim that Canada has “ripped off” the United States for 50 years.
What was on the table
The Prime Minister’s Office said ministers would hear from guest speakers on the economy, Indigenous partnerships and international affairs. In practice, the two days were dominated by the trade war and by Alberta. Calgary Mayor Jeromy Farkas, Red Deer Mayor Cindy Jefferies and Calgary pollster Janet Brown addressed cabinet on Thursday, along with pollsters Bruce Anderson of Spark Advocacy and Sebastien Dallaire of Leger. Eurasia Group president Ian Bremmer presented on the geopolitical outlook. Social psychologist Jonathan Haidt spoke on Friday about children and social media, connecting to the government’s Bill C-34, which would bar those under 16 from holding social media accounts.
Bremmer’s message to cabinet, previewed to reporters beforehand, was the one most relevant to the trade file. Some of the structural changes Trump has made to American trade policy will outlast him, he argued, because they have become popular across the political spectrum. “There’s almost no one in Washington that actually wants to bring down the deficit. There’s almost no one in Washington that wants to stop taking in income from tariffs when they already get used to it,” he said. Tariffs and industrial policies that protect domestic producers fall into that category. Other features of the current moment, including the president’s personal business dealings and his fixation on Greenland, “will not outlast Trump.”
“It’s very important for Canada to differentiate between the broader structural changes in U.S. policy, and some of the predictability and unreliability of President Trump himself,” Bremmer said. He described the damage to the bilateral relationship as “permanent” but added that there is “a great deal of repair that can and will be done.”
That analysis is broadly consistent with what Canadian trade lawyers have been telling clients since the spring: plan for a world in which some level of American tariff on Canadian goods is a durable feature, not a passing storm, and in which CUSMA preferences are worth less than they were because Section 232 and Section 338 duties apply regardless of origin.
The internal trade pivot
Reports from the close of the retreat on Friday indicated that a substantial share of the agenda was devoted to interprovincial trade barriers, the long-standing patchwork of provincial regulations, licensing regimes and procurement rules that economists have estimated costs the Canadian economy tens of billions of dollars a year. The logic is straightforward. Ottawa cannot compel Washington to lower tariffs, but it can, in concert with the provinces, lower the cost of doing business across Canada’s own internal borders, and those savings accrue directly to firms that are losing margin to American duties.
The federal government’s “build here” agenda, which Carney has been promoting as companies look for ways to avoid the newest American tariffs, is part of the same strategy. So is the C$7.5 billion support package Finance Minister Francois-Philippe Champagne and Industry Minister Melanie Joly announced alongside the counter-tariffs on August 25, which extended an earlier C$25 billion in relief. Ministers in Banff were, in effect, mapping out the fall legislative program that will carry these measures into Parliament when it resumes in less than two weeks.
For businesses, the practical elements of the domestic agenda that matter most are the remission framework and the mutual-recognition push. The Department of Finance has said it intends, subject to Governor in Council approval, to extend the existing United States Surtax Remission Order (2025) to goods captured by the September 8 counter-tariffs, so that importers who cannot source inputs in Canada or from non-American suppliers can seek relief. Goods that were in transit on September 8 are already exempt. On the provincial side, the federal government wants provinces to accept one another’s certifications for goods, services and tradespeople, which would let Canadian manufacturers scale nationally rather than treating each province as a separate market.
Alberta in the room
The choice of Banff was not accidental. Alberta votes on October 19 in a referendum that asks whether the province should remain in Canada or hold a decisive new vote on leaving, and the trade war has sharpened the grievances that drive the separatist movement. Carney said Thursday he was “heartened to see the level of support” in public polling for remaining in Canada, but ruled out federal money for the remain campaign. “One of the strengths of the system we have in Canada is it’s not a money game,” he said. “Canada is worth fighting for, and fighting for in this regard means showing up on the 19th or mailing in your ballot or participating in early voting.”
Farkas, the Calgary mayor, told reporters he felt “respected and listened to” by cabinet and credited Ottawa with responding to the referendum “the right way” by showing up across the province, including in areas that have not seen out-of-province MPs in decades. “If they had just diminished this to transactions, if they had asked Albertans, ‘What’s it going to take to keep you,’ I think Albertans are smart, we would have been able to see through that,” he said. He warned that the referendum question has already done “tremendous economic damages” and “pitted neighbours against neighbours in Calgary.”
The Alberta dimension cuts directly into trade policy. Alberta Premier Danielle Smith has been the lone premier to reject the idea of an export tax on crude shipped to the United States, an option some in Ottawa view as Canada’s most powerful lever. Cabinet’s restraint on further retaliation may reflect, in part, a judgment that any measure touching energy would be politically explosive in the province three weeks before the vote.
Where the economy stands
The economic backdrop to the retreat is less dire than the rhetoric of “war” suggests, and that too helps explain the restraint. CBC News analysis published this week estimated the total cost of American tariffs to Canadian GDP at roughly 0.5 per cent, and noted that the windfall from oil trading above US$100 a barrel, driven by the conflict involving Iran, could well outweigh that loss for the federal treasury and for Alberta. Economists surveyed by BNN Bloomberg expect August inflation, due out this week, to have held near 3 per cent as fuel prices eased. The Canadian dollar has weakened, which cushions exporters, though it raises the landed cost of American inputs now subject to counter-tariffs.
The pain is concentrated rather than general. CBC reported that Canada’s counter-tariffs will have an outsized impact on small and medium-sized businesses that import American components, machinery and consumer goods, with limited effect on most household budgets because retailers are working through pre-tariff inventory and many affected items are industrial. The Retail Council of Canada and the Canadian Federation of Independent Business have both flagged the compliance burden on smaller firms that lack in-house customs expertise. On the export side, the auto sector remains the most exposed: Stellantis’s decision this week to sell its Brampton assembly plant, denounced by Brampton’s mayor and by autoworkers as “egregious,” is a reminder that Section 232 auto tariffs, not the newer Section 338 measures, are doing the deepest structural damage. Trump has threatened to raise auto tariffs on Canada from 25 to 50 per cent on January 1, 2027.
The American voices
Washington’s own messaging during the retreat was mixed. U.S. Ambassador Pete Hoekstra, speaking in Newfoundland, urged Canadian politicians to tone down their rhetoric, while telling a separate audience that the United States needs “our allies on board” to counter terrorist threats, a reminder that the security relationship continues beneath the trade fight. Ontario Premier Doug Ford, never one to lower the temperature, said he hopes Trump loses November’s midterm elections and disclosed that he has been receiving calls from American officials. Democrats in Congress have argued that a change in control of the House would give them tools to constrain the president’s tariff authority, though the Section 338 and Section 232 powers he has relied on are statutory and would survive a change in the House majority.
American industry has been more vocal than American politicians. Republican Senator Jerry Moran of Kansas intervened with the administration after Trump threatened to ban Bombardier jet sales, citing the company’s Wichita workforce. The International Dairy Foods Association urged both governments to return to “regular, constructive negotiations” and said an import ban “will not address” the underlying dairy dispute. Wisconsin dairy economists have put the cost of Canada’s counter-tariffs to Class III milk prices at US$0.20 to US$0.35 per hundredweight, or US$65 million to US$113 million a year for that state alone. These are the constituencies Ottawa is counting on to shift the American position, and the reason ministers see no need to add fuel to the fire.
What restraint means for Canadian business
For importers, the absence of new counter-tariffs means the September 8 list is the list to plan against, at least until Parliament returns. Companies should confirm their tariff classifications against the Department of Finance schedule, which sets 15, 25 or 50 per cent surtaxes on more than 700 American tariff lines, each mirroring the American rate on the corresponding Canadian export. Remission applications should be prepared for inputs with no viable non-American source. The government has signalled it will process these under the existing 2025 order rather than a new regime, which should shorten timelines for firms that already hold remission approvals.
For exporters, the Banff posture changes nothing about the American measures, which continue on their own schedule. The September 15 modification to the Section 338 list adds furniture, paper and paperboard, certain aluminum and metal products, all-terrain vehicles, motorboats, upholstery leather and additional cheeses to the 50 per cent tariff while removing salt, cement, tissue, refined lead, chemically pure sugars, switchgear and fishing rod components. The September 29 exclusion order will halt shipments of most Canadian alcoholic beverages, whey products, molasses and motorcycles above 800 cubic centimetres. Distillers face the sharpest cliff; Spirits Canada’s Cal Bricker has called the order “more or less a ban on Canadian whisky.” Moosehead Breweries chief executive Andrew Oland, whose company ships about 15 per cent of its output south, said he was “very disappointed” but not surprised.
The more consequential signal from Banff for exporters is strategic. Ottawa is telling business that diversification and domestic scale are the policy priority, not a rapid return to the pre-2025 status quo. Carney flies to Europe in the coming days for meetings with French President Emmanuel Macron and British Prime Minister Andy Burnham, with a deepened Canada-European Union relationship on the agenda, and the government is hosting an investment summit to showcase its capital agenda. Firms weighing whether to wait out the tariffs or restructure supply chains through Mexico, which Canada deliberately excluded from its retaliation, or through European and Indo-Pacific partners, are being told the government’s money is on restructuring.
The road from Banff
The immediate calendar is crowded. The Section 338 list changes on Tuesday. Parliament resumes the week of September 21 with a fall agenda that ministers drafted in Banff but did not disclose. The American import ban takes effect on September 29. Alberta votes on October 19. The American midterms follow in early November, and Trump’s threatened doubling of auto tariffs sits on January 1. Somewhere in that sequence, if Trump’s “fairly soon” means anything, formal negotiations would have to resume.
Diamond Isinger, who advised Justin Trudeau’s government during the NAFTA renegotiation, told CTV News that a return to the table would require new American offers, because “Canadians wouldn’t accept the status quo of what was on the table weeks ago.” Ralph Goodale, a member of Carney’s Canada-U.S. advisory council, called the August offer “one sided” and “fundamentally uneconomic.” Nothing that emerged from Banff suggests the government disagrees. The retreat’s message was that Canada will hold its current line, keep talking quietly, avoid handing Washington a pretext for further escalation, and use the time to make the domestic economy more resilient. Whether that is a strategy for winning the trade war or simply for surviving it will depend on decisions made in Washington, not in the Rockies.