Washington’s top trade negotiator says a handful of outstanding files are “quite difficult to resolve,” and rules out a return to zero tariffs, leaving Canadian exporters staring down a January deadline on autos and steel
MILWAUKEE, Oct. 3, 2026
The most senior trade official in the Trump administration has publicly lowered expectations for a near term settlement with Canada, telling reporters on the margins of a G20 trade ministers’ meeting in Milwaukee that the two governments remain separated by a small number of files that are, in his words, “quite difficult to resolve.”
The remarks by United States Trade Representative Jamieson Greer, delivered Oct. 1 and amplified across Canadian political and business commentary over the following 48 hours, represent the clearest signal yet that the bilateral standoff that began with the collapse of negotiations on Aug. 22 is unlikely to be resolved on the timeline many Canadian exporters had been quietly counting on.
“We certainly have technical talks with the Canadians,” Greer said, according to reporting by The Canadian Press and CP24. “The reality is there are a handful of outstanding issues that are quite difficult to resolve.”
Greer went further, closing off what had been the most optimistic scenario circulating among Canadian industry associations since late summer. The administration, he said, is “not inclined to go to zero tariffs,” though he added that Washington remains open to an agreement if Canada is willing to say “yes on some of these things.”
He also dismissed Ottawa’s accelerating pivot toward other markets with a line that landed hard in Canadian capitals. Asked about Canada’s push for deeper commercial ties with the European Union, Mercosur and India, Greer said: “Low growth plus low growth is still low growth.”
For importers, exporters and customs professionals on both sides of the border, the significance of the comments is less rhetorical than operational. They effectively confirm that the tariff architecture now in place, layered over roughly 14 months of escalation, should be treated as the planning baseline for the fourth quarter of 2026 and into the first quarter of 2027, rather than as a temporary condition awaiting a handshake.
What is actually in force right now
The current structure is the product of a sequence of measures that accumulated through 2026 rather than a single event, which is part of why compliance teams have struggled to keep pace.
On April 6, 2026, the United States imposed tariffs ranging from 10 per cent to 50 per cent on steel, aluminum and copper articles, applying the duty to the full value of the goods rather than only to the metal content, a technical change with outsized consequences for derivative and downstream products, according to a timeline maintained by the law firm Blakes.
On June 8, 2026, Washington adjusted parts of that regime, reducing tariffs on agricultural machinery and selected HVAC equipment from 25 per cent to 15 per cent. For goods compliant with the Canada United States Mexico Agreement, a 25 per cent rate applied only to non United States content, subject to a minimum total duty of 15 per cent.
On July 24, 2026, the USTR finalized a set of investigations covering 60 economies, including Canada, tied to forced labour in supply chains. A 10 per cent tariff applied to jurisdictions that had committed to forced labour prohibitions, with 12.5 per cent applied to those that had not. CUSMA compliant products of Canada were exempted from that particular layer.
Then came the rupture. Negotiations between the two governments broke down on Aug. 22, and the United States imposed additional 50 per cent tariffs on a broad range of Canadian products effective that date, a measure that had been delayed from Aug. 19.
Canada responded on Sept. 8 with a surtax on approximately C$27.6 billion of United States imports, applied in three tiers of 15 per cent, 25 per cent and 50 per cent depending on the tariff item. Affected sectors include steel, dairy, appliances, agricultural equipment, pulp and paper, electronics, seafood, beauty products, clothing and cooking appliances, according to the Department of Finance and to customs brokerage guidance published by GHY International.
The most recent escalation came on Sept. 29, when the United States moved beyond duties and banned outright the importation of close to US$1 billion of Canadian products, including alcoholic beverages, motorcycles, molasses and whey.
Hanging over all of it is the threat Greer referenced only obliquely in Milwaukee: a prospective 50 per cent tariff on Canadian automobiles, trucks, auto parts and steel, flagged for Jan. 1. Non CUSMA vehicles already face a 25 per cent rate, and Canadian steel already carries a 50 per cent levy, so the practical effect of the January measure depends heavily on a question the administration has not yet answered, namely whether CUSMA compliant vehicles would retain their exemption.
That ambiguity is itself a commercial problem. Automotive suppliers cannot price 2027 programs, negotiate long term supply agreements or commit to tooling without knowing whether the effective rate on a compliant vehicle is zero, 25 per cent or 50 per cent.
The Canadian read
Canada’s International Trade Minister Maninder Sidhu met Greer in Milwaukee on Wednesday, the first encounter between the two since August. Canadian officials characterized the meeting as covering both bilateral irritants and broader World Trade Organization reform, with Sidhu using the G20 platform to advance a digital trade agenda with the European Union, discussions with Mercosur and an economic partnership with India.
Canada United States Trade Minister Dominic LeBlanc remains Ottawa’s designated channel for the core negotiation, and Greer confirmed the two speak frequently.
The division of labour is deliberate. LeBlanc owns the file that determines whether the tariff wall comes down. Sidhu owns the file that determines how much it matters if it does not.
Prime Minister Mark Carney has framed the second track as the strategic response rather than a consolation prize. Since the spring, Ottawa has deployed C$1.16 billion in port infrastructure financing, temporary fuel tax relief, a C$6 billion skilled trades initiative and a C$7.5 billion tariff response package, and has pointed to roughly C$500 billion in prospective investment commitments.
The C$7.5 billion package, announced Aug. 25 alongside the counter tariffs, breaks down into C$1.5 billion through a Regional Tariff Response Initiative aimed at small and medium sized enterprises, a C$500 million liquidity stream through the Business Development Bank of Canada, a C$2 billion Canada Strong Diversification Fund for capital projects, and C$3.5 billion in Rapid Response Supports for Workers and Employers, which includes extended Employment Insurance benefits and a new Worker Retention and Retraining Program. Enhanced access to the Large Enterprise Tariff Loan facility sits alongside it.
“When the United States asked too much and offered too little, we chose to stand” up for Canadians, Finance Minister François Philippe Champagne said in announcing the measures.
The opposition presses
The Greer comments gave Canada’s opposition an opening it took within 48 hours.
Conservative critics Stephanie Kusie and Shuvaloy Majumdar demanded on Oct. 3 that Carney make resolution of the United States file his central priority, accusing Sidhu of spending the G20 meeting on everything except the bilateral relationship that accounts for the overwhelming majority of Canadian goods trade.
The critique has a factual core and a political one. The factual core is that no combination of European, South American and Indian market access replaces the United States in the near term. The political core is the suggestion that diversification is being used to disguise the absence of a deal.
Government defenders counter with the trade data, which has turned in a direction few forecasters expected a year ago. Exports to destinations other than the United States reached a record C$25.6 billion in July, and overseas markets now account for 33.7 per cent of Canadian merchandise exports, a structural shift rather than a monthly anomaly. Export volumes overall rose 3.6 per cent, and second quarter gross domestic product grew 0.8 per cent, an annualized pace of roughly 3.3 per cent.
The same data set carries the counterargument. Exports bound for the United States fell 6.6 per cent in July. Employment dropped by 42,000 in August. Wage growth of 2.0 per cent trailed inflation at 3.0 per cent, and grocery prices remain about 29 per cent above their August 2021 level.
In other words, the aggregate economy has absorbed the shock better than feared, while the parts of it most exposed to the border have not.
What “difficult to resolve” probably means
Greer did not enumerate the outstanding files, and neither government has published a list. But the contours are visible from the last round of talks, which came close enough that LeBlanc described the two sides as “very close” before the process broke down.
Reporting at the time indicated the package under discussion would have cut steel and aluminum tariffs from 50 per cent to 25 per cent, reduced the automotive rate from 25 per cent to 15 per cent, and addressed softwood lumber relief. Canadian softwood producers continue to pay combined anti dumping and countervailing duties that have oscillated through 2026, with rates in the mid 20s to mid 30s depending on the review period and the company.
Dairy supply management was and remains the most politically charged file. The White House signalled that Canada had moved on dairy sector rules. LeBlanc insisted the system would remain “entirely intact,” while noting that United States tariffs on Canadian dairy would become “non existent” under the contemplated arrangement. Both statements can be true simultaneously, which is precisely why the file is difficult: the distance between the two governments may be smaller than the distance between Ottawa and its own agricultural constituencies.
Alcohol is the other live irritant, and it runs in both directions. Carney asked provinces to restock American beverages on liquor board shelves as a goodwill measure. Manitoba Premier Wab Kinew answered with a line that circulated widely: “No CUSMA, no Booze-ma.” Kinew expressed open scepticism about the durability of any commitment from the Trump administration and reserved the right to pull the products again.
Quebec’s Christine Frechette said negotiations were “far from over” and complained that provinces lacked information they needed to make their own decisions. Canada’s chief trade negotiator Janice Charette has remained in Washington working the details.
The provincial dimension matters more in this dispute than in previous Canada United States confrontations, because several of the levers Washington wants pulled, liquor distribution and certain procurement preferences among them, sit with provincial governments rather than with Ottawa.
Economic stakes of the January threat
The potential January measure on autos and steel is the single largest unresolved exposure.
Analysts cited in coverage of the original threat estimated that a 50 per cent automotive tariff could put roughly 87,000 Canadian jobs at risk and affect about 0.8 per cent of Canadian gross domestic product. Those figures assume no offsetting production shifts and no CUSMA carve out, so they should be read as an upper bound rather than a forecast.
The effect would not be confined to Canada. United States automakers operate integrated North American production networks in which components cross the border multiple times before final assembly. A 50 per cent duty applied without a content based carve out would tax the same steel repeatedly as it moves through stamping, subassembly and final build. American assembly plants that depend on Ontario built components would face either higher input costs or supply interruption.
Steel is already demonstrating what that looks like in practice. Demand for cold rolled and galvanized product in traditional Canadian markets fell by almost 25 per cent in the second quarter of 2026 compared with the 2024 quarterly average, a contraction that has translated directly into idled lines and layoff notices in Hamilton and Nanticoke.
Catherine Cobden, president and chief executive of the Canadian Steel Producers Association, has argued that the tariffs work against the continental objective Washington says it is pursuing. “Canada cannot simultaneously be treated as a strategic partner and as a trade threat subject to punitive tariffs,” she said. The association notes that Canadian tariff rate quotas reduced offshore primary steel imports by 16 per cent in the first quarter of 2026 against the prior year, evidence it offers that Canada is enforcing against the same global overcapacity the United States cites.
What importers and exporters should do now
The practical guidance flowing from the Milwaukee comments is straightforward, if unwelcome.
First, treat the current rate structure as the fourth quarter baseline. Quotes, landed cost models and customer contracts written on the assumption of an imminent settlement now carry meaningful risk. Companies that built tariff sunset assumptions into 2027 pricing should revisit them.
Second, get the origin determination right. Canada’s surtax applies only to goods that satisfy CUSMA marking rules for United States origin, and goods from Puerto Rico, Guam, American Samoa, the Northern Mariana Islands and the United States Virgin Islands fall outside it. CBSA Customs Notice 26-23 confirms that “proof of origin may consist of a commercial invoice or other documentation containing the minimum data elements required under CUSMA.” Importers accounting through CARM must use surtax codes 26186A for the 15 per cent tier, 26186B for 25 per cent and 26186C for 50 per cent, entering the amount in field 85.
Third, claim remission at the time of entry rather than seeking a refund later. Existing remission orders remain in force and new requests continue to be accepted under the United States Remission Framework, but refund processing can run for months, and the working capital cost of a 50 per cent duty paid and later recovered is substantial for a mid sized importer.
Fourth, document in transit status rigorously. Goods already in transit on Sept. 8 qualified for exemption from the Canadian surtax with appropriate bills of lading or cargo control documents. Similar questions are now arising on the American side in connection with the Sept. 29 import prohibitions, where the distinction between goods imported but not yet entered for consumption and goods still moving has become commercially decisive.
Fifth, scenario plan the January automotive and steel measure in two versions, one with a CUSMA exemption and one without. The gap between those two scenarios is large enough that treating either as the base case is a bet rather than a plan.
Sixth, examine the diversification programs. The Canada Strong Diversification Fund and the Regional Tariff Response Initiative are oversubscribed in some regions and undersubscribed in others, and the experience of the past month has shown that the companies that engage early fare better than those that wait for conditions to clarify.
A negotiation without a deadline
One structural feature of this dispute sets it apart from previous Canada United States confrontations, and it helps explain why Greer could speak as he did without triggering a market reaction.
There is no statutory deadline forcing a settlement. The 2018 renegotiation of the North American Free Trade Agreement ran against a congressional calendar and a Mexican presidential transition, which concentrated minds. The current standoff has no equivalent forcing mechanism. The CUSMA joint review process is proceeding on its own track, and Carney has said Canada’s internal review work is finished, but the review is a scheduled consultation rather than an expiry.
That absence cuts both ways. It removes the risk of an accidental collapse into a legal vacuum. It also removes the pressure that historically produced compromise in the final 72 hours of a negotiation. Trade lawyers advising Canadian clients have begun describing the situation as a managed dispute rather than a negotiation, a distinction with real consequences for how long companies should expect current conditions to persist.
The second structural feature is that a meaningful share of the American measures rests on national security and emergency authorities rather than on conventional trade remedy findings. Measures built on those authorities can be adjusted by proclamation quickly, in either direction, which makes the rate environment more volatile than a duty set through an administrative review with a published schedule.
For a Canadian exporter, that volatility is the operative risk. A countervailing duty rate changes once a year through a predictable process. A proclamation can change on a Friday evening.
Sectoral exposure is uneven
The aggregate figures disguise how concentrated the damage is.
Steel, aluminum and the derivative products built from them absorb the heaviest direct burden, followed by automotive, forest products and, since Sept. 29, a set of consumer goods removed from the American market entirely rather than taxed.
Energy, which remains Canada’s single largest export category by value, has been comparatively insulated, and services trade has continued to expand. Agriculture occupies an uncomfortable middle position, exposed through the dairy file politically and through equipment and input costs commercially, since agricultural machinery sits on Canada’s own counter tariff list.
That unevenness complicates the policy response. A broad support package distributes assistance across an economy in which most sectors are not in distress, while the sectors that are in distress need relief measured in quarters rather than years. The federal decision to route C$3.5 billion specifically to worker retention and retraining reflects an acknowledgment that some of the affected capacity will not return in its current form even if tariffs are removed.
It also complicates the negotiation. The files Greer called difficult are difficult partly because each one has a concentrated Canadian constituency that would bear the cost of a concession, while the benefit of a settlement would be diffused across an economy that is, in aggregate, still growing.
The shape of the next six weeks
Nothing in the Milwaukee remarks suggests a rupture. Greer confirmed continuing technical talks and left the door open. Equally, nothing in them suggests a breakthrough is imminent.
The next scheduled multilateral moment is the G20 summit in Miami in December, which falls awkwardly close to the Jan. 1 date attached to the automotive and steel threat. Whether that proximity creates leverage for a settlement or simply compresses the timeline for a further escalation is the question Canadian industry will spend the autumn trying to answer.
For now, the operative sentence remains the one Greer delivered in Milwaukee. A handful of issues. Quite difficult to resolve. No inclination to go to zero.
Canadian exporters have been told, in the plainest language used so far, to plan accordingly.