US-Canada trade deal would introduce steel quota with 25% tariffs

The United States and Canada are inching toward a trade deal that would set a tariff-rate quota on Canadian steel, taxing imports at 25% up to a specified volume and slapping the full 50% rate on anything beyond that. The framework represents the first serious attempt to dial back the escalating tariff war between the two countries since duties on Canadian metals spiraled out of control in 2025.

Negotiations described as intense ran from August 19 to 21, 2026, with a midnight deadline looming that would trigger even steeper tariffs on additional Canadian goods.

How the tariffs got here

The current mess traces back to Section 232, the national security provision the US has used to justify tariffs on imported metals. Washington imposed 25% duties on Canadian steel and aluminum starting in March 2025.

By June 2025, those tariffs had doubled to 50%.

Canada didn’t sit quietly. Ottawa rolled out its own retaliatory measures, including slashing tariff-rate quotas on non-USMCA steel imports to just 20% of 2024 levels starting late 2025.

What the deal looks like

Under the deal taking shape, Canadian steel shipped to the US would face 25% tariffs on volumes up to the quota, with suggested annual limits around 4 million metric tons. Any steel beyond that cap would still be subject to the current 50% duty.

The negotiations focused primarily on steel, though aluminum came up as well. The exact treatment for aluminum remains unresolved. Auto tariffs also entered the conversation, with potential adjustments that could lower the rate on vehicles to 15%.

Why this matters beyond metals

The 4-million-metric-ton quota being discussed is itself a negotiating battleground. Set it too high, and American producers lose the protection the tariffs were designed to provide. Set it too low, and Canadian exporters are effectively locked out of their largest market even with the lower rate.

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