US, Canada in talks to ease steel and auto tariffs; deal possible before Nov. 3 vote, sources say

The United States and Canada are negotiating relief from tariffs on Canadian steel and autos. Reuters reported on October 26, citing two US and four Canadian sources, that the two governments are trying to repair relations after trade talks broke down in August, but no agreement has been reached yet.

What the talks cover

The talks focus on tariffs imposed under Section 232 of US trade law, including up to 50% on Canadian steel and 25% on autos, with negotiators discussing potential relief from those duties. Trump has previously announced he would raise tariffs on steel and auto imports from Canada to 50% from January 1, 2027. The August talks collapsed in part over whether to cut duties on medium- and heavy-duty vehicles critical to Canadian factories; US automakers had hoped the talks would ease the cost of the original 25% tariffs on shipping vehicles and parts across the border.

Why the timing matters

One Canadian source briefed on the negotiations said a deal on steel and auto tariffs was possible before the November 3 elections, while US sources said the Trump administration wanted Canada to make further concessions. Reuters notes that just 32% of Americans approve of Trump, that Republicans risk losing control of Congress in next week's midterm elections, and that tariffs on Canadian imports have become a political liability, with Republican candidates in border states calling for an end to the trade war with Canada.

What each side is saying

Prime Minister Mark Carney said there had been a slight intensification in talks with the United States and that Ottawa had not changed its stance, adding that any progress came because the US was coming closer to Canada's position, without giving details. A spokesperson for Dominic LeBlanc, the minister responsible for Canada-US trade, said Canada remains in constructive dialogue on a range of priorities and stands ready to work in good faith towards a more mutually beneficial trading relationship that respects Canada's interests. A US Trade Representative official said the office and Canada have also been in contact in recent days on the overall architecture of any deal and all other trade issues; the White House and the Commerce Department did not immediately respond to requests for comment.

What to watch next

A Canadian industry source cautioned that any deal may not be a broad one: if it happens, it will happen fast, but it would likely be a narrowed deal. Because Section 232 tariffs are administered by the Commerce Department, Commerce Secretary Howard Lutnick rather than the US Trade Representative's office is at the centre of the negotiations, and Lutnick and LeBlanc have been in regular contact recently. Trump signed an order on Friday removing 50% tariffs on some Canadian agricultural and forestry products, and predicted at a rally on Sunday that the trade dispute would be resolved soon, without providing specifics.