Canada-U.S. Trade Talks Near Deal on Steel, Aluminum, and Energy

Strategic Insights -

Canada and the United States are near a deal on trade tariffs affecting steel, aluminum, and energy, with a possible agreement ready for signing by Prime Minister Justin Trudeau and U.S. President Donald Trump at the upcoming Asia-Pacific Economic Cooperation summit. Such a deal would provide significant relief for the Canadian metals industry, which has been impacted by U.S. tariffs. However, talks on automobiles and softwood lumber exports have stalled, with the Americans showing no willingness to budge on these issues.

Key Takeaways:

  • The Canadian and U.S. teams have made significant progress on steel and aluminum trade tariffs, with Canada likely to accept quotas in exchange for lower tariffs.
  • The talks involve top Canadian and U.S. officials, including Dominic LeBlanc, Michael Sabia, and Kirsten Hillman, as well as affected industries.
  • The Canadian negotiators have returned to Ottawa, but the door remains open for further travel to Washington before the APEC summit.
  • The Trump administration has imposed 50-per-cent tariffs on steel and aluminum, 25-per-cent tariffs on automobiles with a carve-out for parts compliant with the USMCA, and 45-per-cent tariffs on lumber exports.
  • Any trade relief would ease pressure on Prime Minister Justin Trudeau, who has been criticized for failing to reach a deal with Trump despite the summer negotiations.
  • The talks also involve the possible revival of the Keystone XL oil pipeline from Alberta to Texas refineries, which was cancelled by former President Joe Biden.
  • Critical minerals, which the Americans are keen to obtain, are not on the table in these talks.

Statistics:

  • 50%: Tariffs imposed by the Trump administration on steel and aluminum.
  • 25%: Tariffs imposed by the Trump administration on automobiles with a carve-out for parts compliant with the USMCA.
  • 45%: Tariffs imposed by the Trump administration on lumber exports.
  • 0%: Tariffs on Chinese electric-vehicle imports in exchange for Beijing removing its ban on Canadian canola, as proposed by China and Saskatchewan and Manitoba premiers.
  • Oct. 29: The start date of the APEC summit in South Korea, where Trudeau and Trump are likely to meet on the sidelines.

Sources:

  • The Globe and Mail, October 23, 2022
  • "Canadian and U.S. talks see progress on steel and aluminum, with Australia to be added to the list of Ottawa and Washington's main international allies against Beijing's slow-moving growth and declining trade apparatus."
  • "Mr. LeBlanc, who also turned down a second half in the House of Commons debate earlier this week, will return to Ottawa on Friday."
  • "We're making progress. We're into a level of detail that we hadn't seen previously, but we still have work to do. My objective is to continue to do that work until we get to the deal, but we haven't set a deadline of a particular date in the next week or two."