US and Canada negotiate trade deal to lower steel and aluminum tariffs to 25%

The United States and Canada are in active talks over a trade arrangement that would bring tariffs on some Canadian steel and aluminum exports down to 25%. That sounds like a lot until you consider where they are now: 50%, after doubling from the original 25% rate set back in March 2025.

The negotiations center on reviving tariff-rate quotas, or TRQs. Think of them as a volume cap with a discount: Canada could export a certain amount of steel and aluminum at a reduced tariff rate, but anything beyond that threshold would still face the steeper duties.

How tariffs got this high

The path to 50% tariffs on Canadian metals has been a slow-motion escalation rooted in Section 232, the national security provision the US has used to justify trade barriers on steel and aluminum imports. The initial 25% tariff went into effect in March 2025, covering Canadian steel and aluminum broadly.

By June 4, 2025, those tariffs had doubled to 50%. Canada didn’t exactly take it quietly.

Ottawa responded with 25% retaliatory tariffs on specific US steel and aluminum imports, measures that remain in force and are projected to extend into 2026 and 2027.

What’s on the table

The TRQ framework under discussion would give Canadian exporters a path to the lower 25% rate, potentially even less, in exchange for volume commitments or other concessions. One mechanism already in play: the US Commerce Department currently allows some Canadian and Mexican producers to apply for tariff reductions if they commit to expanding production capacity within the United States.

Canadian Prime Minister Mark Carney has been vocal about the scope of the negotiations, insisting that metals can’t be carved out as a standalone issue. His position is that steel, aluminum, autos, and lumber all need to be part of a comprehensive deal that benefits both countries.

The talks are unfolding alongside a broader review of the USMCA, the trade agreement formerly known as NAFTA that governs commerce between the US, Canada, and Mexico.

The economic stakes

The deadline pressure is real. With August 19, 2026, marked as the cutoff for new or expanded tariffs, both sides have a ticking clock pushing them toward resolution. Canada is reportedly preparing to present formal proposals in the near term, which could accelerate the timeline.

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