WASHINGTON: The tentative trade deal between the United States and Canada would lower tariffs on certain Canadian exports of steel and aluminum to 25% and cut duties on Canadian auto exports to 15%, according to sources.
The details have yet to be finalised and are not expected to apply across the board.
For steel and aluminium, different rates could apply to some derivative products that include those metals, said some of the source, who requested anonymity to discuss terms of the agreement before it is announced.
Tariffs on the non-US content in autos exported from Canada would be reduced to 15% from 25%, according to people familiar with the negotiations.
Talks between US and Canadian trade advisers continued on Wednesday, less than 24 hours after US President Donald Trump paused planned 50% levies on billions of dollars of Canadian goods to allow more time to negotiate.
The planned changes to the metals and autos tariffs could help unlock a lasting deal to avert the broader duties before a Friday deadline.
Trump in the past has demanded changes to trade agreements or spiked them entirely at the last minute.
“We’re looking at that,” Trump said on Wednesday when asked if he would reduce tariffs on Canadian metals.
“We may bring some of the tariffs down to a level where other countries are because Canada was paying a higher tariff.”
The planned changes revealed Wednesday underscore how in addition to averting a new, broad tariff, Canada is also poised to win some relief from existing duties that have been an irritant in the relationship with the United States.
The move on steel and aluminium under discussion would generally halve US tariffs on imports of the two metals, which currently face a 50% rate.
The countries are also discussing exclusions and other measures that would change the scope of the levies, some of the people said.
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The US is also poised to reduce tariffs on the non-US content in automobiles imported from Canada to 15% from 25%, some of the source said.
In a social media post on Wednesday, Canadian Prime Minister Mark Carney said negotiators are moving towards a deal with “the best terms in each of Canada’s most important strategic sectors” - an apparent nod to matching the United Kingdom’s preferential 25% tariff on steel, and Japan and South Korea’s 15% rate on autos.
But as the full picture of the agreement begins to come into focus, Carney risks blowback domestically if it appears he paid a high price to codify tariffs that are still significant, and which he has called illegal.
The Canadian dollar was up 0.2% at 1.3876 per US dollar mid-morning in London.
The scope of the deal represents a balancing act for Carney – Canada is both getting preferential rates typically not applied to other countries, and agreeing to accept rates that are above recent historical norms for the two closely integrated economies.
It’s also a potential blow to the United States and Canada’s other major North American trade partner, Mexico, which has made several concessions and overtures in the quest for its own deal. — Bloomberg
