US could cut key tariffs as part of proposed Canada deal, source says

[WASHINGTON/OTTAWA] The US and Canada are closing in on a trade deal in which Washington could cut some contentious tariff rates on Canadian-built cars and trucks, and key metals, a source familiar with the matter said on Wednesday (Aug 19).

US President Donald Trump had threatened a new batch of tariffs on Canadian imports starting on Wednesday but, citing progress in talks, pushed back the date to Saturday.

Trump told reporters earlier in the day that the two sides had reached an agreement but later on tempered his remarks, saying the United States will “probably have a deal with Canada ... I think we have a deal.”

Canadian Prime Minister Mark Carney said on X that the two sides were “moving towards an agreement.”

Auto tariffs cut to 15%

The source said the proposed deal was expected to cut top-line tariff rates on Canadian-built cars and trucks to 15 per cent from the existing 25 per cent. Industry executives say that rate threatens to kill domestic auto manufacturing.

Two auto executives said Canada was pushing to reduce the tariff to 10 per cent.

The 15 per cent top-line autos tariff also would come before deductions for the value of US-produced content, bringing the effective rate substantially lower, the source told Reuters. The proposed deal would also halve the top-line tariff rates on Canadian steel and aluminum to 25 per cent, the source said.

Two industry sources familiar with the deal added that these lower steel tariffs would apply only to a certain import volume under a quota arrangement.

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One of the sources said the quota would likely be set at 4 million metric tons per year, and any imports above that level would be subject to the original 50 per cent steel tariff.

Washington imposed the steel, aluminum and autos tariffs last year under a national security law, prompting Canadian countermeasures.

Carney briefs premiers

Carney briefed the premiers of the 10 provinces about the state of the discussions on Wednesday afternoon.

“It was a constructive and, frankly, a very important conversation,” Dominic LeBlanc, the Canadian minister responsible for trade with the US, said of Carney’s meeting with provincial leaders. “We have more work to do.”

Nova Scotia Premier Tim Houston told reporters that Carney had asked the provinces to return US alcohol to store shelves. Most provinces stopped distributing US alcohol products in response to tariffs Trump imposed on goods from Canada last year.

“We’ll work through that process,” Houston said. “Of course, it’s pending a final deal that is representative of the types of things we’re hearing today.”

Officials express confidence

US Trade Representative Jamieson Greer told reporters after meeting his Canadian counterparts earlier in the day that negotiators had reached an agreement that would protect American workers and strengthen the North American economy.

Trump hailed what he called a great deal subject to the finalisation of documents that would mean US manufacturers and farmers would not pay any tariffs to export their goods to Canada.

Pressed on what Washington would do about the US auto tariff, Trump replied: “They were paying a high number. We’re reducing it a little bit.”

It is unclear whether auto tariffs will be resolved this week or delayed until a broader scheduled review of the US-Mexico-Canada trade deal, which looks set to drag on into next year.

A White House proclamation said senior US officials had been told Canada had committed to remove what Washington considers discriminatory or unequal treatment of US alcoholic beverages, cheese and motor vehicles.

A Leger opinion poll showed on Wednesday that 56 per cent of Canadians want Carney to make no further concessions to the US. REUTERS