A former high-ranking Canadian trade negotiator anticipates that an agreement with the Trump administration for tariff relief on Canadian steel and aluminum exports to the U.S. is on the horizon. 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 Donald Trump’s presidency, mentioned during a discussion in Washington that there is a renewed momentum in the talks on steel and aluminum following Trump’s meeting with Prime Minister Mark Carney at the White House earlier this month.
Sargent highlighted that reaching a deal on these issues is in the economic interest of the U.S., emphasizing that both parties are keen on resolving these matters promptly. He hinted that a potential agreement on steel might involve a tariff-rate quota system, allowing a specific amount of Canadian steel to enter the U.S. annually with minimal or zero tariffs, while imposing significantly higher tariffs on imports exceeding the set quota.
The U.S. has imposed a 50% tariff on steel and aluminum imports from Canada and other countries since June. After Trump’s meeting with Carney on October 7, he directed his top trade officials to expedite agreements on steel, aluminum, and energy, according to Canada-U.S. Trade Minister Dominic LeBlanc.
There are speculations that a deal could be finalized for Trump and Carney to sign at the upcoming Asia-Pacific Economic Cooperation (APEC) summit. Sargent noted Trump’s inclination towards what he terms as “deals,” suggesting that the opportunity to announce an agreement with the Canadian Prime Minister at APEC holds appeal for the U.S. President.
While Carney’s team refrained from outright denying reports of an imminent deal, they are attempting to manage expectations regarding a swift resolution ahead of the summit. Carney mentioned ongoing discussions with the U.S., emphasizing that negotiations are delving into intricate details but still require further work.
Despite optimism from Sargent regarding a swift resolution on steel and aluminum tariffs, he expressed doubts about the likelihood of CUSMA renegotiations leading to a comprehensive free-trade deal with the current protectionist U.S. administration. He highlighted the challenge faced by Canada in renegotiating a free-trade agreement with a partner seeking reduced trade liberalization.
The future of North American trade and security was discussed during the panel, with concerns raised about the potential erosion of CUSMA into a less comprehensive agreement. The outcome of North American trade talks in the coming year may be influenced by the Trump administration’s shifting focus on domestic production and its stance towards global economies like China, according to Philip Luck, a former deputy chief economist at the U.S. State Department.