US-Canada trade deal may cut auto tariffs from 25% to 15%

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The US is also expected to cut tariffs on Canadian steel and aluminum.

President Trump says documents just need to be finalized for the new deal.

The Trump administration had threatened 50 percent tariffs against Canada.

A new trade deal being finalized between the United States and Canada may see tariffs on vehicles built in Canada cut from 25 percent to 15 percent, a change which will no doubt have a big impact on the country’s auto sector.

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This week, US President Trump and Canadian Prime Minister Mark Carney, plus their negotiators, have been ironing out the details of an important new trade deal. The US leader had threatened to impose blanket 50 percent tariffs on Canadian goods on Wednesday, but has pushed this back to Saturday in the hope that the trade deal can be finalized before then.

Read: Canada Built 64,000 Fewer Cars While US Plants Added 44,000

Reuters understands that the potential new 15 percent auto tariffs may come before deductions for the value of US-produced content in vehicles manufactured in Canada, effectively reducing the tariffs below this mark.

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Perhaps of equal importance to the potential lower tariffs for Canadian cars would be a reduction in tariffs on steel and aluminum from 50 percent to 25 percent. It’s understood that the lower tariff would apply to up to 4 million metric tons of steel and aluminum per year, and that imports beyond this level will continue to be subject to the 50 percent rate.

A Deal Is Almost Done

Speaking to reporters after the most recent round of talks , President Trump indicated a deal is close, stating “So subject to the finalization of documents, we have a deal with Canada .” Canadian Prime Minister Carney stopped short of confirming the same, but said “significant progress” had been made in the trade talks.

“Canada entered these discussions with the best overall trade terms,” he said, reports Bloomberg . “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.”

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