A former prominent Canadian trade negotiator, Tim Sargent, anticipates an imminent agreement with the Trump administration to alleviate tariffs on Canadian steel and aluminum exports to the United States. Sargent, who served as Ottawa’s deputy minister of international trade during the negotiation of the Canada-U.S.-Mexico Agreement under President Trump, expressed optimism about the ongoing discussions following a recent meeting between Trump and Prime Minister Mark Carney at the White House.
According to Sargent, there is a growing momentum in the negotiations as both parties recognize the economic benefits of reaching a resolution promptly. He suggested that a potential agreement on steel might involve a tariff-rate quota system, allowing a specified amount of Canadian steel to enter the U.S. annually with minimal tariffs, while imposing significantly higher tariffs on imports exceeding the quota.
The Trump administration has faced opposition from American manufacturers regarding tariffs on Canadian products, as they argue that such tariffs increase costs and reduce their competitiveness against foreign imports. The U.S. has maintained a 50% tariff on steel and aluminum imports from Canada and other countries since June.
Following a meeting on October 7, Trump instructed his top trade officials to expedite deals on steel, aluminum, and energy. There are speculations that a deal could be ready for signing at the upcoming Asia-Pacific Economic Cooperation summit, with sources suggesting Trump’s interest in making such announcements.
While the possibility of a deal is being discussed, Carney and his team are cautious not to raise expectations prematurely. Negotiations are progressing into more detailed discussions, indicating potential challenges in achieving a comprehensive free-trade agreement amidst the current protectionist trade environment.
Philip Luck, a former deputy chief economist at the U.S. State Department, highlighted that Canada and Mexico’s chances of securing exemptions from tariffs depend on the Trump administration’s focus on domestic production and its approach towards managing economic relations with China. The future of North American trade dynamics will likely be influenced by these factors in the coming year.