Dairy, alcohol and auto quotas top irritants in Canada-U.S. trade talks

Canada's top trade negotiators stayed in Washington on Monday as talks continued ahead of a deadline for U.S. President Donald Trump's latest tariffs. Among the key sticking points is Canada's supply management system for dairy, which the U.S. Trade Representative says leaves American exporters facing tariffs of up to 245 per cent on cheese and 298 per cent on butter once quota levels are exceeded. Prime Minister Mark Carney has said his government remains committed to supply management, and Dairy Farmers of Canada is pressing Ottawa not to offer further concessions.

Provincial bans on U.S. alcohol are another flashpoint. All provinces pulled American booze from shelves last year in response to Trump's tariffs; Alberta and Saskatchewan have since reversed course, but eight provinces, including Ontario and Quebec, have not. Trump's executive order on the new tariffs noted that Canadian imports of U.S. alcohol fell 81 per cent in the year after the bans began.

The U.S. has also criticized Canada's 'Buy Canadian' procurement policy, saying American companies face barriers such as having to disclose board information or prove independence from U.S. parent firms when bidding on Canadian contracts. Federal officials have defended the policy as a way to prioritize Canadian workers and industries.

A fourth irritant involves quotas on tariff-free U.S.-built vehicle imports, which Ottawa introduced in retaliation for earlier Trump tariffs and reviews every three months. The White House has objected to the quotas, particularly when applied to automakers shifting production out of Canada.