The United States and Canada are closing in on a trade deal that would cut some of the most contentious tariff rates on Canadian-built cars, trucks, steel and aluminum, with negotiators racing to finalize terms before a Saturday deadline that would trigger new levies on $20 billion worth of Canadian goods.
US President Donald Trump had threatened a new batch of tariffs on Canadian imports starting Wednesday but pushed the date to Saturday, citing progress in talks. Trump told reporters he thought the two sides “have a deal,” while Canadian Prime Minister Mark Carney said they were “moving towards an agreement.”
Key Terms Emerging
A source familiar with the negotiations told Reuters that the proposed deal would cut the top-line tariff rate on Canadian-built cars and trucks from 25 percent to 15 percent, a figure that would fall further once deductions for US-produced content are applied. Industry executives had warned the existing rate threatened to kill domestic auto manufacturing in Canada.
Steel and aluminum tariffs would be halved to 25 percent from 50 percent under the proposed terms, but only up to a quota of 4 million metric tons per year. Imports exceeding that threshold would face the original 50 percent duty, according to two industry sources. Canada had pushed for an auto tariff as low as 10 percent.
“We feel confident that we’ve reached an agreement that will not only continue to protect American workers, American jobs, American supply chains but really strengthen the North American economy,” said US Trade Representative Jamieson Greer.
Dairy and Keystone in the Mix
Trump claimed Canada had agreed to end tariffs on US agricultural products, saying they would be “totally eviscerated, down to zero.” However, details remained vague. Canada’s supply management system limits dairy imports at low tariffs before imposing much higher rates, and the US has long sought full market access.
In a Truth Social post, Trump also floated reviving the long-canceled Keystone XL pipeline, which was designed to carry up to 830,000 barrels of crude daily from Canada’s oil sands to US Gulf Coast refineries. The project became a defining environmental and political battle before Canada’s TC Energy abandoned it following Biden’s 2021 permit cancellation.
Eight of Canada’s 10 provinces still restrict or ban US alcohol in retaliation for earlier tariffs, with Ontario’s government-run LCBO, one of the world’s largest alcohol purchasers, having pulled nearly $723 million in US products annually from its shelves. The White House says the emerging deal includes a Canadian commitment to address those restrictions, though Carney cannot unilaterally order provinces to restore sales.
Carney is due to brief the premiers of all 10 provinces on the deal Wednesday evening. If finalized, the agreement would also factor into the broader scheduled review of the US-Mexico-Canada trade pact, which is expected to drag into next year.
Sources: Reuters; AP News; White House
discussion