U.S. and Canada Race to Cut Steel and Auto Tariffs Before November 3 Midterms
The U.S. and Canada are actively negotiating relief from tariffs on Canadian steel and autos, with sources saying a deal is possible before the November 3 midterm elections, though several doubt it closes that fast.
The talks center on Section 232 duties, the national-security tariff authority administered by the Commerce Department, including levies of up to 50% on Canadian steel and 25% on autos. That puts Commerce Secretary Howard Lutnick, not the Trade Representative’s office, in the lead for the U.S. He and Canadian Trade Minister Dominic LeBlanc have been in regular contact, according to sources on both sides.
The auto industry is watching closely. Honda Motor’s head of public affairs, Jennifer Thomas, said Tuesday at the Reuters Automotive USA conference in Detroit that a scheduled January 1 increase in tariffs on Canadian steel and auto imports would be “catastrophic for the entire industry.” She said North American automakers depend on the trilateral trade framework, which includes Mexico, to stay competitive, and that Honda may not build a planned eighth North American assembly plant if the deal isn’t extended. “I am cautiously optimistic that cooler heads will prevail, and we will avoid that January 1 doubling of the tariffs,” Thomas said.
Prime Minister Mark Carney confirmed Monday there had been a “slight intensification” in talks, but said Canada has not changed its stance and that any progress reflects the U.S. moving toward Canada’s position. “We have very clear bottom lines, red lines, which meant that we were not willing to sign what was offered in August,” Carney said. Asked how he knows Trump will stand behind whatever agreement is reached, he said simply: “I don’t.”
Sources told Global News that negotiations are “moving quickly” at the political level, but pointed to Trump’s record of announcing agreements and then walking them back, as happened in August. For a deal to happen in the next week, two sources said the U.S. would need to give ground on the issues that broke talks then: Canada’s right to strike its own trade deals with other countries, and how tariffs on autos, steel and aluminum would be structured. A Canadian industry source said any agreement would likely be narrow rather than comprehensive.
Talks went dark after Canada walked away in late August, when Carney said the U.S. made a last-minute push for language that would limit Canada’s ability to negotiate with third countries, weaken French-language requirements, and damage Canada’s auto sector. The administration responded with additional tariffs on billions of dollars of Canadian goods, and Ottawa matched them dollar for dollar.
Tariffs on Canadian imports have since become an issue in border-state Senate races, particularly Michigan and Maine. Trump told supporters Sunday he expects the trade war with Canada to end “pretty soon.”
Without a deal, the higher tariffs on Canadian steel and auto imports take effect January 1.
Sources
- Canada-U.S. trade talks ‘moving quickly’ at political level ahead of midterms: sources - National — globalnews.ca
- US-Canada Tariff Talks: Steel and Auto Deal Possible Before November 3 Elections - News and Statistics — indexbox.io
- Higher tariffs on Canadian imports would be ‘catastrophic,’ Honda exec says — aol.com