U.S. eyes cutting metal, auto tariffs in Canada deal

The United States is considering reducing tariffs on Canadian steel, aluminum, and automobiles as part of a trade agreement taking shape between the two countries, according to people familiar with the discussions, even as the auto sector remains a major stumbling block with a deadline now just days away.

According to The Wall Street Journal News Corp ↗ 0.75%, the U.S. is contemplating cutting steel and aluminum tariffs from 50% to 25% and lowering the overall tariff on automobiles from 25% to 15%. The developments come after President Donald Trump announced late Tuesday a three-day postponement of threatened 50% tariffs on nearly $30 billion worth of Canadian goods, saying a deal is close to finalization.wsj+2

Auto Tariffs Remain the Thorniest Issue

While progress has been made on metals, the automotive sector continues to be the most contentious element of the talks. Canada has pushed to reduce the auto tariff rate to 10% or expand an exemption tied to U.S. parts content already in vehicles, but the Trump administration has held firm at a minimum 15% rate.newstribune

A further complication involves eligibility. Washington wants the lower rate to apply only to vehicles with a high share of American-made content, while Canada seeks broader relief across its auto supply chain. Greig Mordue, a former Toyota Motor Corp. executive who now teaches at McMaster University, warned that even a 15% levy on non-U.S. content would amount to a 7% to 9% effective tariff rate — still a heavy burden in a business of thin margins. "It will continue to wither," he said of the Canadian auto industry.newstribune

General Motors ↗ 1.40%, Ford Motor Co. ↘ 3.52%, and Stellantis ↘ 3.13% all have factories in Canada, but Honda Motor Co. ↗ 2.16% and Toyota now account for the majority of Canadian vehicle production, making their interests a key concern for Prime Minister Mark Carney's government.newstribune

Both Sides Claim Progress, but No Documents Released

Trump told reporters Wednesday the deal is "very good" for both countries, confirming the U.S. has agreed to "readjust" auto tariff rates. "They were paying a high number, we're reducing it a little bit," he said. "You gotta give something."cbc

In exchange, the U.S. is demanding Canada remove its retaliatory tariffs on American autos, steel, and aluminum, and lift provincial bans on American alcohol sales. U.S. Trade Representative Jamieson Greer said the deal would "protect American workers" while strengthening the North American economy.bbc+1

Carney said in a statement that "significant progress has been achieved" and that Canada is "moving towards an agreement that reinforces that Canadian advantage." Canadian Trade Minister Dominic LeBlanc met with Greer in Washington on Wednesday morning, saying afterward that supply management for Canada's dairy sector would remain "entirely intact."cbc

Neither side has released documents detailing specific commitments, and negotiations remain ongoing ahead of the August 21 deadline when the tariff pause expires.bbc+1