U.S., Canada work on deal to ease steel, auto tariffs

Washington and Ottawa are working on a deal to ease U.S. tariffs on Canadian steel and autos, Reuters reported Tuesday, citing two U.S. and four Canadian sources who were not named.

The talks matter because Section 232 duties of up to 50 per cent on steel and 25 per cent on autos are still in force, and President Donald Trump has said he will set tariffs on Canadian steel and autos at 50 per cent from Jan. 1, 2027.

Reuters said an agreement would ease those tariffs, but gave no terms. One Canadian source told the agency a deal could come before the Nov. 3 U.S. midterm elections. U.S. sources said the administration still wants further concessions from Canada. A Canadian industry source said any deal would likely come quickly but be limited in scope, and might not happen at all, Reuters reported.

Commerce Secretary Howard Lutnick, whose department administers the Section 232 tariffs, has been in frequent contact with Dominic LeBlanc, the minister responsible for Canada-U.S. trade, according to one source cited by Reuters. A spokesperson for LeBlanc said Canada was continuing a constructive dialogue and was ready to work toward “a trading relationship that benefits both sides while protecting Canadian interests,” Reuters reported. A U.S. Trade Representative official said the office and Canada had recently discussed the broader structure of any agreement.

The White House and the Commerce Department did not immediately comment, Reuters said.

Prime Minister Mark Carney said Monday in Ottawa that talks had picked up slightly, but he said Canada’s position had not changed. “To the extent any progress has been made, it’s because the U.S. is coming closer to our position,” Carney said, according to Bloomberg. He also said Canada would not sign what the U.S. offered in August. “We have very clear bottom lines, red lines, which meant that we were not willing to sign what was offered in August,” he said.

Trump told Detroit’s Fox 2 on Sunday that “we’re getting close to a deal, and a deal could happen that’s going to be very good for everybody,” Bloomberg reported. As we reported Sunday, White House economic adviser Kevin Hassett said on Fox News that a deal was “very close.”

Talks collapsed on Aug. 21, according to Bloomberg, after which Trump imposed 50 per cent tariffs on about $20 billion of Canadian goods and Canada retaliated on a similar value of U.S. products. On Aug. 24, Trump wrote on Truth Social that tariffs on Canadian cars, trucks, auto parts and steel would rise to 50 per cent on Jan. 1, 2027, Fox Business and CBS News reported. He wrote that “Build in the U.S. and there are ZERO TARIFFS.”

Carney said at the time that the U.S. had introduced new demands on Canada’s other trade relationships, its auto sector and protections for Canadian culture and the French language. “In short, they asked too much, and they offered too little,” he said, according to Fox Business. Bloomberg reported the August round also broke down partly over whether tariff relief would extend to medium- and heavy-duty trucks.

For Canadians, the stakes sit in steel mills, auto assembly lines and parts plants. Ottawa and Ontario unveiled an $8.7-billion plan for steel, autos and mining last week, and the White House has said a separate set of changes to the 50 per cent list on other Canadian goods takes effect Oct. 30. A steel and auto deal would be a narrower arrangement than a full trade agreement.

Political pressure is rising on the U.S. side. Reuters reported that Trump’s approval ratings are at record lows, that Republicans could lose control of Congress on Nov. 3 and that Republican candidates in border states have urged an end to the trade war. Trump signed an order Friday lifting 50 per cent tariffs on some Canadian agricultural and forestry products, a move expected to help Maine businesses.

No signing date or deal text has been released. Both governments have said talks continue. The next fixed dates are the Oct. 30 tariff changes and the Nov. 3 elections.

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Via Reuters, Bloomberg, Fox Business and CBS News.