MARY LOUISE KELLY, HOST:
The U.S. is scheduled to impose new 50% tariffs on Canada, hitting about $20 billion worth of goods. Trade negotiations to head off those tariffs between the neighboring countries have been going on for weeks. Canada's Prime Minister Mark Carney and President Trump spoke by phone Monday afternoon. That's according to Carney's office. But so far, the two countries have not reached a resolution. NPR's Emily Feng is tracking this story. Hey there, Emily.
EMILY FENG, BYLINE: Hello.
KELLY: Hey. So we've seen multiple rounds of tariff fights between the U.S. and Canada since Trump returned to the White House. Explain what would be included in this latest threatened round.
FENG: So you're totally right. There's been this back-and-forth of tariffs from both countries. This round, the U.S. trade representative says, is retaliation for Canadian tariffs on American goods. Those tariffs were in response to an even earlier round of U.S. tariffs last year. So the tariffs we're talking about today are potentially 50% tariffs on Canadian goods ranging from cement to wine to hockey sticks. That would cover about $20 billion worth of goods, which sounds like a lot, but in reality, it's just about 5% of total Canadian exports to the U.S.
Overall, I should note, trade between the U.S. and Canada is still mostly tariff-free because of a North American trade agreement called the USMCA that was signed during Trump's first term. But these potential tariffs would also not apply to Canadian exports on things like critical minerals and fish. But the real significance of these proposed tariffs are symbolic.
KELLY: Symbolic how?
FENG: So if they take effect tomorrow, they could further jeopardize that all-important North American trade agreement I just mentioned between the U.S. and its two largest trading partners. That's Canada and Mexico. And the U.S. is currently reviewing a renewal of that agreement. I spoke to Gary Hufbauer about this. He's a trade expert and fellow at the Peterson Institute for International Economics. That's a nonpartisan think tank in Washington. And he says this kind of uncertainty about the trade agreement puts one of the U.S.'s most important trade agreements on what he describes as life support.
GARY HUFBAUER: What this does, it puts a real cloud on economic integration within North America because as a firm, you do not know whether, you know, the system is going to exist next year or the year after.
FENG: And that uncertainty would further strain a political relationship that's already fraying with Canada.
KELLY: Further strain it. How bad are relations?
FENG: They're pretty bad. I mean, remember that Trump talked repeatedly about annexing Canada as the 51st state of America. That was not well received in Canada. And he had this to say about Canada earlier this month.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT DONALD TRUMP: Canada. Canada's nasty. They are. They're nasty. People think Canada - they're nasty. People - I love the people, but they're nasty. Nasty leadership.
FENG: So it's rhetoric like this that's put political pressure on Carney in Canada to push back against Trump. This month, the leader of Canada's opposition party urged Carney to show backbone on trade negotiations - basically, not to concede to U.S. demands, for example, to get rid of Canadian tariffs on American dairy and cars. And that is partially what has stalled trade talks.
KELLY: Well, and we're now in the last hours - right? - before...
FENG: Yes.
KELLY: ...Tomorrow's deadline. Where do negotiations stand?
FENG: Canada's Carney has called negotiations delicate and intense. He has argued that the tariffs on Canada lead to higher prices for Americans at a time when inflation and a war with Iran have already bumped up the cost of consumer goods. For example, Carney has said U.S. tariffs already in place on Canadian aluminum exported to the U.S. have led to aluminum prices to jump more than 50% for Americans. Trump has pushed back saying these tariffs are necessary to make American goods more competitive.
KELLY: That's NPR's Emily Feng. Thank you.
FENG: Thank you. Transcript provided by NPR, Copyright NPR.
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