On the verge of a trade war: US and Canada near agreement
The US and Canada are nearing a trade agreement that could prevent further escalation of their economic conflict. The proposed framework includes reducing US tariffs on Canadian-made vehicles from 25% to 15%, and on steel and aluminum from 50% to 25%. President Donald Trump has delayed the implementation of new tariffs until Saturday, citing progress in negotiations.
The US and Canada moved closer on Wednesday to a trade agreement that could prevent further escalation in the economic conflict between the two neighbors. According to a source familiar with the details of the talks, the emerging framework includes reducing the US tariff on Canadian-made cars and trucks from 25% to 15%, alongside a possible reduction of the rate on steel and aluminum from 50% to 25%. President Donald Trump, who threatened to impose additional tariffs on imports from Canada this week, delayed their entry into force until Saturday following progress in the negotiations and said that the parties will "probably" reach an agreement.
After a period of trade confrontation and mutual threats, the US and Canada are approaching an agreement that could ease some of the tariffs that have harmed trade between the countries. However, the clock is ticking: as long as a final agreement is not signed, new US tariffs on Canadian goods worth about $20 billion are scheduled to take effect on Saturday at 00:01 US Eastern Time.
Trump granted a three-day extension, expressing optimism by telling reporters that "we will probably have an agreement with Canada." Canadian Prime Minister Mark Carney also released a positive message, writing that the countries are "moving towards an agreement."
Negotiation Details
One of the most significant clauses concerns the Canadian automotive industry. According to sources, the base tariff on cars and trucks manufactured in Canada is expected to drop from 25% to 15%. Industry executives had warned that the 25% tariff posed a real threat to continued production in the country, and Ottawa is seeking to set the tariff at 10%.
Even a 15% rate may be lower in practice, as components manufactured in the US and included in Canadian vehicles will be deducted. Trump confirmed that some relief is expected, stating: "They paid a high number. We are lowering it a little."
The framework also includes possible relief for the steel and aluminum sectors. Tariffs may drop from 50% to 25%, though for steel, the relief is expected to be limited to a quota, reportedly around four million tons per year.
Canada's Reciprocal Steps
Parallel to potential US concessions, Canada is required to take steps on its part. Minister of Trade Dominic LeBlanc described the talks as "constructive," but clarified that more work remains. One key issue is the practical boycott imposed by many provinces on American alcoholic beverages in response to last year's US tariffs.
The White House stated that Canada has committed to removing measures that Washington views as discriminatory regarding American alcoholic beverages, cheeses, and vehicles. US Trade Representative Jamieson Greer expressed confidence that the understandings reached will protect American workers and strengthen the North American economy.
Despite the optimism, the agreement is not yet signed and final details may change. Until the documents are finalized, the US threat remains in place, with Saturday serving as the next deadline.
