The U.S. is likely to lower tariffs on Canadian steel, aluminum and automobiles as part of a trade framework being devised by the nations, according to people with knowledge of the negotiations.
Though the deal hasn't been finalized, the U.S. is considering a plan to lower tariffs on steel and aluminum from 50% to 25%, and decrease top-line tariffs on automobiles from 25% to 15%, the people said. They cautioned that terms of the deal could change before any official announcement, and details are still being worked out.
The moves would come as part of a trade deal between the countries that President Trump announced on Tuesday night, less than two hours before a separate set of tariffs on Canada was scheduled to take effect early Wednesday. He said that the imposition of 50% tariffs on some $20 billion worth of Canadian goods would be paused for three days while negotiations continued.
Canadian officials have made lowering tariffs on sectors such as steel, aluminum, lumber and automobiles a priority in those trade negotiations and a condition for the country making concessions on U.S. demands. But the nations have so far released no official details on how U.S. tariffs will change under the agreement.
A White House official said an agreement with Canada is "being finalized," and any reporting about its details "should be regarded as speculation" until an announcement is made. The Office of the U.S. Trade Representative didn't immediately comment. The Commerce Department, which administers the steel and aluminum tariffs, declined to comment. A spokesman for Canada's minister in charge of U.S. trade declined to comment, citing the ongoing negotiations.
In the White House on Wednesday, Trump said that he was "looking at" reducing tariffs on Canadian steel and aluminum to levels faced by other nations.
"We may bring some of the tariffs down to the level where other countries are, because Canada was paying a higher tariff," Trump said, adding that Canadian tariffs on U.S. agricultural goods would also be removed in the deal.
It remains unclear how the new U.S. tariffs will account for the U.S.-Mexico-Canada Agreement. Under that deal, automakers are given deductions from the 25% tariff for the U.S. content in their vehicles, significantly lowering the overall tariff on automobiles that comply with the USMCA.
Steel imports from Canada could face a quota system, said some of the people familiar, and tariffs on imports that exceed the quota would be higher. Aluminum isn't likely to face a quota under current considerations, they said.
Prime Minister Mark Carney said in a statement Wednesday that "significant progress" had been made in the trade talks, without providing details.
"Canada entered these discussions with the best overall trade terms," he said. "We are now moving towards an agreement that reinforces that Canadian advantage, including by securing the best terms in each of Canada's most important strategic sectors and providing greater certainty about our future trading relationship."
Dominic LeBlanc, Canada's minister in charge of U.S. trade, told reporters in Washington on Wednesday that the country's "supply-management system" for dairy would be protected under the deal. That system allows the government to set prices for dairy products and imposes import controls and quotas on domestic producers to keep supplies in check.
Carney was clear that "we needed to ensure that the supply-management regime remained entirely intact, and I'm confident that that's the case," LeBlanc said.
The Trump administration has identified the system as a major grievance in bilateral ties, and it has also drawn criticism from countries such as Australia and New Zealand for limiting market access.
Under the USMCA, tariffs as high as 300% on U.S. dairy products apply after a certain percentage of exports enter the country tariff-free. The International Dairy Foods Association said last year that the U.S. had never exceeded the quota because of other protectionist measures that it claims Canada has in place. In 2023, a USMCA dispute-settlement panel found that Canada's dairy-import quotas don't breach the trade pact.
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