Carney says significant progress made as Washington eyes cuts to steel, aluminum and auto tariffs in a framework deal with Canada
Canada and the United States moved closer to a trade agreement on Wednesday after prime minister Mark Carney declared that "significant progress" had been made in negotiations, as U.S. officials weighed substantial cuts to tariffs on Canadian steel, aluminium, and automobiles.
Though no official deal text has been released, people familiar with the talks told the Wall Street Journal that Washington is considering reducing tariffs on Canadian steel and aluminium from 50 per cent to 25 per cent, and cutting the top-line tariff on automobiles from 25 per cent to 15 per cent.
Those figures represent a meaningful retreat from the tariff levels that have weighed on Canadian industrial and manufacturing sectors throughout 2026, though people briefed on the discussions cautioned that terms could still change before any announcement.
The talks accelerated after President Donald Trump announced a three-day pause on threatened 50 per cent tariffs on roughly US$20 billion worth of Canadian goods a reprieve he declared less than two hours before those levies were set to take effect early Wednesday.
Trump told reporters at the White House on Wednesday that he was "looking at" reducing tariffs on Canadian steel and aluminium to levels faced by other countries, adding: "Canada was paying a higher tariff."
What's on the table — and what isn't
Canadian officials had made reducing tariffs in steel, aluminium, lumber, and automobiles a precondition for any Canadian concessions on US demands.
Those priorities appear to be gaining traction. Dominic LeBlanc, Canada's minister in charge of US trade, told reporters in Washington on Wednesday that Canada's supply-management system for dairy would be protected under the framework. The system, which allows the government to set domestic dairy prices and imposes import controls on producers, has long been a flashpoint in bilateral relations and a target of US trade pressure.
"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.
Steel imports from Canada could be subject to a quota system under current considerations, with tariffs on volumes that exceed the quota set at a higher rate, according to people familiar with the negotiations. Aluminium is not currently expected to face a quota.
The deal's interaction with the existing CUSMA Agreement also remains unresolved. Under the agreement automakers receive deductions from tariffs based on the US content of their vehicles, which effectively lowers the net tariff on compliant vehicles below the headline rate. How any new tariff framework reconciles with those existing provisions is still being worked out.
The potential revival of the Keystone XL pipeline, floated by Trump as part of the broader discussions, adds another dimension to the energy investment outlook. Separately, Trump said Canadian tariffs on US agricultural goods would be eliminated under the agreement, a concession that could affect advisors with clients in agribusiness or rural investment trusts.
Provinces still need to move
Alongside the federal negotiations, Carney has asked provincial and territorial leaders to restore American alcohol to store shelves; a retaliatory measure several provinces adopted earlier this year.
Nova Scotia Premier Tim Houston signalled openness, noting that "whether Canadians will buy it is another discussion." Quebec Premier Christine Fréchette was more guarded, saying she needed "more information to decide if it's good for Quebec."
