A former prominent Canadian trade negotiator suggests that a deal between the Trump administration and Canada to alleviate tariffs on Canadian steel and aluminum exports to the U.S. is imminent. Tim Sargent, who served as Ottawa’s deputy minister of international trade from 2016 to 2018 during negotiations for the Canada-U.S.-Mexico Agreement (CUSMA), indicated a renewed momentum in discussions following a recent meeting between Trump and Prime Minister Mark Carney.
Speaking at a panel event in Washington, Sargent highlighted the economic advantages for both parties in reaching an agreement promptly. He mentioned the possibility of a tariff-rate quota system for Canadian steel imports into the U.S., allowing a set volume to enter tariff-free annually while imposing higher tariffs on quantities exceeding the limit.
The Trump administration has faced opposition from U.S. manufacturers regarding tariffs on Canadian goods, with concerns raised about increased costs affecting competitiveness against foreign imports. The U.S. has maintained a 50% tariff on steel and aluminum imports from Canada and other countries since June.
After directing his top trade officials to expedite deals on steel, aluminum, and energy in a recent meeting with Carney, Trump could potentially sign a deal with Canada at the upcoming Asia-Pacific Economic Cooperation (APEC) summit. While the prospect of a deal appeals to Trump, Carney’s team is tempering expectations about a swift resolution.
Despite optimism for a tariff reduction deal, Sargent expressed skepticism about achieving a comprehensive free-trade agreement through renegotiating CUSMA under a protectionist administration. He highlighted the challenge of negotiating with a partner seeking reduced market access, potentially leading to an agreement with significant gaps.
Philip Luck, a former deputy chief economist at the U.S. State Department, emphasized that Canada and Mexico’s ability to secure exemptions from tariffs may hinge on the Trump administration’s focus on China’s impact on the U.S. economy. The direction of North American trade discussions in the coming year will likely be influenced by the administration’s priorities regarding domestic production and trade relations with China.