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The United States and Canada are negotiating a potential agreement to reduce US tariffs on Canadian steel and automobiles, as both countries seek to repair trade relations strained by the collapse of negotiations in August, according to sources familiar with the discussions.
The talks focus on tariffs imposed under Section 232 of US trade law, including duties of up to 50% on Canadian steel and 25% on automobiles. Negotiators are discussing possible relief from these measures, two US sources and four Canadian sources told Reuters.
A Canadian source briefed on the negotiations said an agreement could be reached before the November 3 elections. However, US sources said the Trump administration wanted Canada to make further concessions before finalising a deal. The sources spoke anonymously because the negotiations remain private.
The dispute has become a political concern for President Donald Trump and Republican candidates in states bordering Canada. According to the report, just 32% of Americans approve of Trump, while Republicans face the risk of losing control of Congress in the upcoming midterm elections.
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Some Republican candidates in border states have called for an end to the trade dispute with Canada, as tariffs on Canadian imports create pressure on businesses and cross-border industries.
The negotiations are being led in part by US Commerce Secretary Howard Lutnick because the Commerce Department administers Section 232 tariffs. Canada’s Dominic LeBlanc, the minister responsible for Canada-US trade, has also maintained regular contact with Lutnick, according to a source familiar with the discussions.
A spokesperson for LeBlanc said Canada remained engaged with Washington on several priorities.
“Canada remains in constructive dialogue with our U.S. counterparts on a range of priorities,” the spokesperson said. “We stand ready to work constructively and in good faith towards a more mutually beneficial trading relationship that respects Canada’s interests.”
The Office of the US Trade Representative has also been in contact with Canadian officials about the broader framework of a potential agreement and other trade issues, a US trade official said.
The White House and the Commerce Department did not immediately respond to requests for comment.
Canadian Prime Minister Mark Carney said discussions with Washington had intensified slightly, although Ottawa had not changed its position.
“To the extent any progress has been made, it’s because the US is coming closer to our position,” Carney told reporters without providing further details.
A Canadian industry source said an agreement could emerge quickly but might cover only a limited number of issues.
“If it happens, it’ll happen fast. But my sense is it’ll be a narrowed deal, if it even happens,” the source said.
Another Canadian source said they had long expected a possible agreement on Section 232 tariffs before the midterm elections. The source added that any deal would depend on Trump and Carney, both of whom had indicated that a mutually beneficial agreement was possible.
Carney has repeatedly said he wants an agreement that serves Canada’s interests.
Trade negotiations between Washington and Ottawa broke down in August over several issues, including proposed reductions in duties on medium- and heavy-duty vehicles that are important to Canadian manufacturing.
US automakers had hoped the talks would secure relief from the original 25% tariffs. Those duties have increased the cost of moving vehicles and automotive parts across the border, adding pressure to an industry closely integrated across the two countries.
Trump previously announced plans to increase tariffs on Canadian steel and automobile imports to 50% from January 1, 2027.
At a political rally on Sunday, Trump predicted that the trade dispute would be resolved “soon” but offered no details about a possible agreement.
The latest negotiations follow another trade move by Washington. Trump signed an order on Friday removing 50% tariffs on certain Canadian agricultural and forestry products, a decision that could benefit businesses in Maine.
However, the broader outcome of the steel and automobile negotiations remains uncertain. Officials have not announced a final agreement, and the extent of any tariff relief will depend on the terms reached by both governments.
[…] US and Canada Explore Deal to Ease Steel and Auto Tariffs Ahead of Midterm Elections […]