The United States and Canada are quietly working on a deal to ease the tariffs President Trump has imposed on Canadian steel and autos, two U.S. and four Canadian sources say — a negotiation that, if it lands, would cut costs running through America's own factories. The talks are focused on the duties imposed under Section 232 of U.S. trade law: a tariff of up to 50 percent on Canadian steel and 25 percent on Canadian autos, with negotiators discussing potential relief from both. For the United States, the money at stake is not only Canada's: American automakers have been paying more to move vehicles and parts across a border that their supply chains cross again and again, and relief would lower the cost of building cars on both sides of it. The two governments, the sources say, are trying to repair a relationship that soured after trade talks between them broke down in August.
Because the Section 232 tariffs are administered by the Commerce Department, the talks run through Commerce Secretary Howard Lutnick rather than the U.S. Trade Representative's office, sources on both sides of the border say. Lutnick and Dominic LeBlanc, Canada's minister responsible for Canada-U.S. trade, have been in regular contact recently, one of the sources said. The sources spoke on condition of anonymity because the talks are private. Ottawa is confirming contact and nothing more: "Canada remains in constructive dialogue with our U.S. counterparts on a range of priorities," a spokesperson for LeBlanc said, adding that Canada stands ready to work constructively toward a more mutually beneficial trading relationship. The White House, the Commerce Department and the USTR's office did not immediately respond to requests for comment.
The timing is tight, and both capitals know it. One Canadian source briefed on the negotiations said a deal on the steel and auto tariffs was possible before the November 3 midterm elections, and a second Canadian source said they had believed for some time that a Section 232 deal is likely before the midterms — an agreement that would be driven by Trump and Canadian Prime Minister Mark Carney, both of whom have said a mutually beneficial deal is possible. Carney has said he wants a good deal for Canada. U.S. sources say the Trump administration wants Canada to make further concessions, though they do not say what those concessions are. The talks come as the tariffs on Canadian imports have become a political liability for the president at home, with Republican candidates in border states calling for an end to the trade war with Canada ahead of an election in which his party risks losing control of Congress.
The two sides have been here before, and it ended badly. U.S. and Canadian trade talks collapsed in August over issues such as whether to cut duties on medium- and heavy-duty vehicles that are critical for Canadian factories — the same talks American automakers had hoped would deliver relief from the 25 percent tariffs that have raised the cost of shipping vehicles and parts across the border. There have been small signs of a thaw since. On Friday, Trump signed an order removing 50 percent tariffs on some Canadian agricultural and forestry products, a move that could benefit businesses in Maine. And at a political rally on Sunday, the president predicted the trade dispute with Canada would be resolved "soon," without providing specifics.
Anyone expecting a sweeping settlement should hold off, one person close to the talks warns. A Canadian industry source said a deal could come quickly but would not necessarily be a broad one: "If it happens, it'll happen fast. But my sense is it'll be a narrowed deal, if it even happens." The limits of what is being discussed are plain in what the talks leave out. Aluminium is not part of them: the negotiations as reported cover steel and autos only, and nothing in them offers relief from the separate 50 percent Section 232 tariff that Canadian aluminium also faces.
The clock adds pressure of its own. Trump has previously announced that he would raise the tariffs on steel and auto imports from Canada to 50 percent from January 1, 2027 — meaning the 25 percent duty now charged on Canadian autos is set to double in the new year unless something changes, and a deal struck in the coming days would be struck against that deadline. For American plants that run on Canadian steel and Canadian-made parts, the difference between relief now and a higher wall in January is a difference in what their products cost. What is not yet known is everything that would decide it: no terms have been agreed, no concessions by either side have been announced, and neither government has put a single figure, product list or date on the record. As of Monday, there is a negotiation — regular contact between Lutnick and LeBlanc, and sources on both sides saying a deal is possible within days. There is not yet a deal.
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