A former high-ranking Canadian trade negotiator predicts that an agreement with the Trump administration to ease tariffs on Canadian steel and aluminum exports to the United States is imminent. Tim Sargent, who served as Ottawa’s deputy minister of international trade from 2016 to 2018 during the negotiations of the Canada-U.S.-Mexico Agreement (CUSMA) under former President Donald Trump, shared insights at a Washington event. He highlighted a renewed momentum in the talks following a recent meeting between Trump and Canadian Prime Minister Mark Carney at the White House.
Sargent emphasized the economic benefits for both countries in reaching a resolution on steel and aluminum tariffs swiftly. He suggested that a potential agreement might involve a tariff-rate quota system, permitting a specific volume of Canadian steel into the U.S. annually with minimal or no tariffs, while imposing significantly higher tariffs on imports exceeding the set quota.
The Trump administration has faced opposition from American manufacturers regarding tariffs on Canadian goods, with concerns raised about the impact on competitiveness and prices of intermediate inputs. Since June, the U.S. has imposed a 50% tariff on steel and aluminum imports from Canada and various other nations.
Following the meeting between Trump and Carney on October 7, efforts have intensified to finalize deals on steel, aluminum, and energy. Speculations indicate that a deal could be ready for signing at the upcoming Asia-Pacific Economic Cooperation (APEC) summit. Sargent noted Trump’s inclination towards what he terms as “deals,” suggesting that a potential announcement with the Canadian prime minister at the summit could appeal to the U.S. president.
While Carney’s team has not refuted reports of a potential deal at the APEC summit, they are cautious about setting high expectations. Discussions with the U.S. are ongoing, with detailed negotiations underway to address remaining issues.
Despite optimism for a swift resolution on steel and aluminum tariffs, Sargent expressed skepticism about the prospects of achieving a comprehensive free-trade deal under the protectionist Trump administration. He highlighted the challenge of renegotiating CUSMA amidst reduced U.S. interest in market access, raising concerns about the agreement being weakened over time.
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 shifting focus towards China’s impact on the U.S. economy. The future of North American trade dynamics will be shaped by the administration’s priorities regarding domestic production and trade relationships with other economies, particularly China.