Trump tells Fox News he does not care about updating the North American trade pact as Ottawa dispatches LeBlanc and Charette to Washington with 16 days left before 50 per cent Section 338 duties bite
OTTAWA, August 4, 2026 | Peacock Tariff Consulting
The president of the United States said on Monday that he does not care about updating the trade agreement that governs roughly two thirds of Canada’s merchandise exports. Within hours, Ottawa confirmed it was sending its most senior trade officials to Washington to try to change the terms of a tariff regime that takes effect in just over two weeks.
Those two facts, reported by Reuters on August 3, 2026, are the current state of the Canada United States trade relationship in miniature. One side is publicly indifferent to the architecture. The other is racing a deadline.
In a telephone interview with Fox News Channel’s “Fox and Friends” programme, President Donald Trump was asked whether he would update the United States Mexico Canada Agreement. His answer, as reported by Reuters: “I don’t care. I mean, I don’t really want to. I’d rather be independent. Here’s the thing: Mexico and Canada need us. We don’t need them. The deal is important for them. It’s not important for us.”
The remark landed at a precarious moment. On July 20, 2026, the president signed three proclamations under Section 338 of the Tariff Act of 1930 imposing an additional 50 per cent ad valorem duty on a broad list of Canadian goods. Those duties take effect at 12:01 a.m. eastern time on August 19, 2026, according to the proclamation text cited in an analysis by the law firm MLT Aikins. As of August 4, that leaves 15 days.
Canada is sending its negotiators into that window. Dominic LeBlanc, the minister responsible for Canada United States trade, will travel to Washington for meetings this week, his spokesperson told Reuters. He will be accompanied by Janice Charette, Canada’s chief negotiator to the United States. The spokesperson did not provide a specific date for the meetings. It will be the first in person contact since the Section 338 proclamations were signed.
A tariff instrument no one had used in 96 years
The legal vehicle is what makes this round different from everything that preceded it.
Section 338 of the Tariff Act of 1930 permits the president to impose duties of up to 50 per cent on imports from a country found to discriminate against United States commerce. MLT Aikins noted that unlike Section 301 of the Trade Act of 1974, which requires a formal investigation by the United States Trade Representative, or Section 232 of the Trade Expansion Act of 1962, which requires a national security finding, Section 338 permits the president to act by proclamation alone, with no prior investigation or hearing. The provision dates from the original Smoot Hawley legislation and, the firm noted, had never been used by any previous administration.
The Canadian firm Borden Ladner Gervais characterised the move in its own analysis as the revival of a never before used Depression era law against Canadian trade. Morrison Foerster titled its client note on the subject “Revival of a Dormant Tariff Authority.”
Three features of the proclamations matter more than the headline rate.
First, compliance with the North American agreement provides no shelter. MLT Aikins emphasised that the Section 338 duties apply to all covered goods regardless of whether a product qualifies as originating under the trade pact. That is a sharp break from earlier American tariff rounds, in which a valid origin certification generally secured an exemption. Canadian exporters who spent the past 18 months building origin documentation programmes specifically to stay inside the agreement’s protection will find those programmes irrelevant to this measure.
Second, the duties stack. The 50 per cent applies in addition to any other duties, taxes and fees already owing on the covered goods, rather than replacing them.
Third, the exclusions are narrow but economically significant. Energy products, potash, goods already subject to Section 232 duties, including steel, aluminium, copper, automobiles and auto parts, fish and critical minerals are outside the scope. That carve out protects the largest single categories of Canadian exports by value while leaving a long tail of manufactured and agri food goods exposed.
The three grievances
Each proclamation is tied to a distinct American complaint, and the specificity is deliberate. It is the mechanism by which the administration satisfies the statute’s discrimination finding.
On alcoholic beverages, the administration stated that all but two Canadian provinces and territories halted the purchase, distribution or retailing of United States alcohol beginning in March 2025 without imposing similar restrictions on products from other countries. It cited an approximately 81 per cent decrease, roughly 582 million United States dollars, in Canadian imports of American alcoholic beverages from March 2025 through February 2026 compared with the prior year. Other reporting has put the same decline as a fall from about 718 million dollars to about 137 million.
On motor vehicles, the administration alleged that Canada imposes tariffs and quotas on American vehicles that do not apply to imports from other countries, and that Canada administers those quotas in a way that pressures American automakers to invest in Canadian rather than American production. It cited a roughly 22 per cent decline, about 5.6 billion United States dollars, in Canadian imports of American motor vehicles from April 2025 through March 2026 against the comparable prior period. MLT Aikins observed, citing analysis from the Center for Strategic and International Studies, that the automotive proclamation itself covers a broad range of goods unrelated to autos.
On dairy, the administration argued that Canada’s tariff rate quotas on American cheese are more restrictive than those applied to comparable European Union cheese, notwithstanding that Canada maintains trade agreements with both.
Combined, MLT Aikins estimated, the three proclamations affect nearly 20 billion United States dollars in Canadian imports, roughly 4.9 per cent of total American imports from Canada in 2024. Covered products, per the White House fact sheet, range from wine to hockey sticks to cement. Reuters reported the coverage as including hockey sticks, beer, dairy and plywood.
The United States Trade Representative’s office, Reuters reported, has said the duties are a response to Canada’s retaliation against American auto and metals tariffs, provincial decisions to pull American liquor from store shelves, and a lack of concessions on dairy market access. A USTR spokesperson did not immediately respond to a Reuters query about plans for talks this week.
Ottawa’s position and the negotiating asymmetry
Canada’s counter argument has been consistent. The alcohol boycott and the automotive counter measures were themselves responses to earlier American tariff rounds, and the dairy supply management system is a long standing domestic policy that Canada regards as permissible under its trade commitments. Canada has said it will not negotiate its tariff rate quota allocation policy with countries seeking to weaken supply management.
Prime Minister Mark Carney said after the July 20 announcement that he and the president had agreed to intensify negotiations. Reuters reported at the time that the two leaders spoke the following day. Carney has publicly characterised the American measures as inconsistent with the North American agreement while signalling readiness to engage.
The structural problem is that Canada has been negotiating around a process it is not formally inside. Reuters reported that Canada has thus far been left out of formal negotiations over the trade pact while continuing high level conversations with United States Trade Representative Jamieson Greer. Greer held a third round of talks with Mexico last week aimed at updating the agreement, discussions that Reuters said revealed deep differences over how to tighten regional automotive content rules.
The president opted on July 1 against extending the agreement, a decision that, Reuters noted, set in motion a decade long wind down of the pact unless the three countries agree on revisions before then. That is the context in which the “I don’t care” remark should be read. It is not a new position. It is a restatement of the July 1 decision in blunter language, delivered 16 days before a tariff cliff.
The president’s own framing suggests he believes the strategy is working. He told the programme that “we have the hottest car business” and that the United States is “right now building more car plants than at any time in our history,” adding that automakers “have no tariffs if they build their product here.” He cited Toyota’s announcement of a 3.6 billion dollar investment to expand truck production in Texas, building a pickup currently assembled in Mexico.
An unexpected ally: organised labour
The most notable development for Canadian exporters in the past 48 hours may not have come from either government.
Two major industrial unions that represent workers on both sides of the border, the United Steelworkers and the International Association of Machinists, jointly urged Greer to reconsider tariffs on Canadian goods and to build a more cooperative trade relationship so that the two countries could jointly confront Chinese trade practices that fuel excess industrial capacity.
“Our two nations share a deep collaboration built on decades of economic integration as well as intelligence and defense cooperation,” United Steelworkers International President Roxanne Brown said in a statement reported by Reuters. “Rather than imposing further tariffs through Section 338 or any other mechanism, we should instead work together with our Canadian allies to limit illegal trade practices and advance our shared prosperity.”
That intervention matters because it reframes the argument in terms the administration has been receptive to elsewhere. The unions are not making a free trade case. They are making a China case, and arguing that duties on Canada are a distraction from it. Whether that lands is a separate question, but it gives Canadian negotiators a domestic American constituency to point to that is neither a business lobby nor a Democratic constituency.
The liquor shelf problem Ottawa cannot solve alone
One of the three grievances sits almost entirely outside federal jurisdiction, and that is a structural obstacle no negotiator can drafting away.
Alcohol distribution in Canada is a provincial responsibility. The decisions that produced the roughly 81 per cent collapse in American alcohol sales into Canada were made by provincial liquor boards and provincial governments, not by the Department of Finance. Ottawa cannot order Ontario, Quebec or British Columbia to restock bourbon.
Carney has said that provinces should lift their restrictions only as part of a broader deal with the United States, which is a coherent negotiating position and also an admission that the federal government is bargaining with an asset it does not own. Provincial premiers have their own political calculations. The liquor delisting has been among the most visible and popular Canadian responses to the trade war, and premiers who reversed it without an obvious concession in return would be absorbing domestic political cost for a federal negotiating gain.
The dairy grievance has a parallel problem. Supply management is federal, but it is also politically entrenched across party lines, protected by legislation, and defended by a farm constituency concentrated in Quebec and Ontario. Dairy Farmers of Canada has consistently maintained that Canada retains the discretion to set tariff rate quota allocation policy. The government has said it will not negotiate allocations with countries seeking to weaken the system. That leaves very little room for the kind of incremental concession that normally unlocks a tariff negotiation.
Of the three grievances, only the automotive file offers obvious negotiating space, and it is entangled with the regional content rules that Reuters reported have already produced deep differences in the American talks with Mexico.
Stakeholder reaction across the exposed sectors
Industry response through the past two weeks has clustered around a single theme: the absence of any origin based exemption removes the one tool exporters had built their compliance programmes around.
In forestry, the Forest Products Association of Canada put the coverage at 98 added tariff lines. Nighbor, its chief executive, argued in comments reported by The Canadian Press that the measures would also work against American housing affordability, noting that Canada is the third largest exporter of plywood to the United States, a business worth about 500 million dollars, and the leading supplier of fibreboard at roughly another 400 million. Ian Dunn, president and chief executive of the Ontario Forest Industries Association, called the measures “a drastic and unjustified barrier to a highly integrated North American supply chain.”
In metals, where Section 232 duties already sit at 50 per cent and the Section 338 exclusion for Section 232 goods prevents further stacking, the concern is different. Catherine Cobden, president and chief executive of the Canadian Steel Producers Association, has described the past year of 50 per cent American duties on Canadian steel as “severe and unsustainable.” The steel exclusion from Section 338 is therefore not relief. It reflects the fact that the sector is already at the ceiling.
Economic exposure: reading the 20 billion dollar number correctly
The 20 billion dollar figure is easy to underweight. It represents under 5 per cent of American imports from Canada, and the largest export categories are excluded. On aggregate, the direct hit is modest against a bilateral goods relationship measured in the hundreds of billions.
That aggregate view is misleading for three reasons.
Concentration. Twenty billion dollars spread across a small number of tariff lines and a small number of exporting firms is catastrophic at the firm level even when it is marginal at the national level. A Canadian brewery, a hockey equipment manufacturer, a cement producer or a cheese plant that sells predominantly into the United States faces a 50 per cent duty with no origin based escape and no phase in.
Stacking. Because the duty applies on top of existing obligations, exposure for some goods is well above 50 per cent in total. Exporters need to model the full duty stack, not the headline rate.
Precedent. This is the point Canadian trade counsel have been making most forcefully. The proclamations establish that a president can impose 50 per cent duties on a trading partner by proclamation alone, with no investigation, no hearing, no expiry date and no exemption for goods that satisfy the governing trade agreement. Whatever happens on August 19, that authority now has a working precedent. Every Canadian sector currently sheltered by an exclusion is sheltered by discretion rather than by rule.
What Canadian exporters should be doing this week
With 15 days on the clock, the practical priorities are narrow.
Verify scope line by line. The product lists annexed to each of the three proclamations control. As MLT Aikins advised, the scope extends well beyond the headline categories. Exporters who checked only the dairy, alcohol and automotive annexes may have missed coverage elsewhere. The Forest Products Association of Canada found 98 forestry tariff lines in the action.
Stop relying on origin certification as a defence for these duties. It does not apply. Origin documentation remains essential for other tariff programmes, but it will not exempt a covered good from Section 338 treatment.
Model the landed cost at the American customer’s door, not at the border. The commercial question is whether the customer will still buy at the delivered price. That determines whether the exposure is a margin problem or a volume problem.
Examine entry timing. Duties apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time on August 19. Shipments that can clear before that moment avoid the duty. Foreign trade zone and bonded warehouse strategies change the arithmetic and should be evaluated with a customs broker rather than assumed.
Review contracts. Incoterms determine who is the importer of record and therefore who pays. Delivered duty paid terms place the burden on the Canadian seller. Fixed price agreements without a change in law clause allocate the entire increase to one party.
Keep the negotiation possibility in the model. MLT Aikins noted that the administration has not always followed through on announced tariff measures and that the 30 day window before effect provides time for negotiation or adjustment. That cuts both ways: exporters should not restructure supply chains irreversibly on the assumption the duties are permanent, nor plan on their withdrawal.
The wider question
The Section 338 proclamations and the president’s Monday remarks point in the same direction. The administration is not treating the North American agreement as the operative framework for the relationship. It is treating unilateral tariff authority as the operative framework and the agreement as an artefact to be wound down.
That is a different problem from a tariff dispute. Tariff disputes are resolved by trading concessions. A framework problem is resolved, if at all, by rebuilding the framework, and one party has said publicly that it would rather be independent.
Canada’s response has been to pursue two tracks at once: negotiate for relief in Washington while reducing dependence on the American market. Ottawa launched a strategic exports office on July 30, described by International Trade Minister Maninder Sidhu as a “government level dealmaker” combining strategic advocacy, government financing and diplomatic support. Sidhu said the government supported more than 28 billion dollars in international wins for Canadian businesses last year. Carney has committed to doubling Canada’s non American exports, a target he framed in an October 2025 speech as generating an additional 300 billion dollars in trade.
Diversification on that scale is a decade long project. August 19 is 15 days away. For Canadian exporters, the two timelines do not help each other, and the near term outcome rests on whatever LeBlanc and Charette can extract in Washington this week.