Agriculture Minister Gerry Ritz says he likes what he heard this week during a trip to Washington, and senses a willingness to adjust a U.S. regulatory policy at the heart of the dispute.
"I feel very optimistic," Ritz said Thursday during a conference call. "Far more so after this trip than after any of the others that I've done."
Tariffs are looming over a range of American agricultural products, with Canada and Mexico both planning to penalize U.S. goods including wine, orange juice, pork and beef, barring an amicable resolution.
The dispute stems from mandatory meat-labelling rules for U.S. beef, pork and chicken. Proponents believe American consumers deserve to know where their meat was born, raised and slaughtered.
Opponents include the governments of Canada and Mexico, industry and business-friendly U.S. lawmakers. They say these rules are costly to apply, damage the competitiveness of non-American businesses, and have nothing to do with safety because meat gets inspected with or without the labels.
They've also argued, with some success, that the rules violate international law.
Now the U.S.'s neighbours are planning to impose retaliatory tariffs on a range of American products by this spring, in the event they win a final round at the World Trade Organization and the U.S. still doesn't adjust its labelling requirements.
Ritz said if it comes to that, Canada will impose tariffs strategically in order to pressure lawmakers from specific states. But he's increasingly hopeful it won't get that far.
On this week's trip, Ritz said he's heard new support for Canada's position in both chambers of Congress, including among powerful committee chairs who can advance or block bills.
That's a change since the last midterm elections. When Democrats still controlled the Senate, Debbie Stabenow chaired the agriculture committee and she supported mandatory labelling.
Now, said Ritz, both chambers have high-ranking members willing to change the rules.
"A growing number of senior people on Capitol Hill are receptive to this message," he said. "What they're looking for is the proper vehicle."
He said lawmakers are trying to figure out whether they might introduce new labelling requirements as a stand-alone bill, or attach them to fiscal legislation.
He said lawmakers have asked the U.S. agriculture secretary for guidance on new rules. The secretary, Tom Vilsack, has reportedly told Congress that it has two options to avoid retaliation: repeal the offending parts of the labelling law, or allow for a more generic label, such as "Made in North America."
Just in case peace doesn't come, Ritz said, Canada is preparing for a trade war.
"Retaliation is not Canada's preferred option," he said. "(But) we're just assuring the Americans that we're not gonna blink."