US and Canada Seek Steel and Auto Tariff Deal Before Midterms

Washington and Ottawa are negotiating cuts to U.S. tariffs on Canadian steel and vehicles, with a possible agreement before the November 3 midterm elections that could let President Donald Trump ease a politically costly trade dispute.

Two U.S. and four Canadian sources described the negotiations to Reuters, which follow the collapse of trade talks in August.

The discussions cover duties imposed under Section 232 of U.S. trade law, including levies of up to 50% on Canadian steel and 25% on autos.

A Canadian source briefed on the talks said the parties could reach an agreement before the vote.

U.S. sources, however, said Washington was seeking additional concessions from Ottawa.

Election Pressure

The dispute has become a liability for Trump as Republicans face the prospect of losing control of Congress.

His approval rating stands at 32%, while Republican candidates in states bordering Canada have called for the trade conflict to end.

Trump told a rally on Sunday that he expected a resolution “soon,” without setting out terms.

One Canadian source said an agreement on the Section 232 duties had appeared likely ahead of the midterms for some time.

Securing it would depend on Trump and Canadian Prime Minister Mark Carney, the source added.

Industry expectations remain more guarded. A Canadian industry source said negotiations could produce a rapid but limited outcome.

“If it happens, it'll happen fast. But my sense is it'll be a narrowed deal, if it even happens,” the source said.

Lutnick Leads Negotiations

Commerce Secretary Howard Lutnick has a central role because his department oversees the Section 232 tariffs, according to sources in both countries.

Lutnick has recently maintained regular contact with Dominic LeBlanc, Canada’s minister responsible for trade with the U.S., one source said.

The U.S. Trade Representative’s office is also discussing the framework for a potential agreement and other trade matters with Canadian officials, a USTR official said.

LeBlanc’s office said Canada remained engaged with Washington and was prepared to pursue an agreement that protected Canadian interests.

The White House and Commerce Department did not immediately provide comment.

Ottawa Holds Its Position

Carney described a modest increase in negotiating activity while maintaining that Canada had not shifted its demands.

“To the extent any progress has been made, it's because the US is coming closer to our position,” he told reporters, without elaborating.

The August breakdown centered on disagreements over reducing tariffs on medium- and heavy-duty vehicles, an issue with major implications for Canadian factories.

U.S. automakers had sought relief from the original 25% duties, which increased the expense of moving vehicles and components across the border.

Trump has announced plans to lift tariffs on Canadian steel and auto imports to 50% from January 1, 2027.

He has also begun easing selected trade restrictions.

An order signed Friday removed 50% duties on some Canadian agricultural and forestry goods, potentially benefiting Maine businesses.