---
title: "Final Sprint in US-Canada Trade Talks: Canadian Media Reports Proposed Steel Quotas with 25% Tariff Within Quota"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/296641713.md"
description: "As the Saturday deadline set by Trump for imposing a 50% tariff approaches, Canadian representatives held consultations with their US counterparts in Washington on Friday. According to Canadian media, the proposed US-Canada trade agreement intends to establish a Tariff-Rate Quota (TRQ) system for Canadian steel exports: a 25% tariff would apply to annual export volumes within a 4 million ton quota, while exports exceeding the quota would continue to face a 50% tariff. In exchange, Canada has agreed to eliminate all retaliatory tariffs on US steel. While there has been progress in automotive tariff negotiations, Canada's demands have not been fully met. Trade in aluminum, lumber, and furniture remains under discussion"
datetime: "2026-08-21T17:35:01.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/296641713.md)
  - [en](https://longbridge.com/en/news/296641713.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/296641713.md)
generator: "portal-rs"
---

# Final Sprint in US-Canada Trade Talks: Canadian Media Reports Proposed Steel Quotas with 25% Tariff Within Quota

US-Canada trade negotiations have entered the final sprint, with key details of a potential agreement emerging.

On Friday, August 21, local time, Canadian media outlet The Globe and Mail, citing three informed sources, reported that the trade agreement being negotiated by the Canadian and US governments proposes establishing a **Tariff-Rate Quota (TRQ) system** for Canadian steel exports: a 25% tariff would apply to Canadian steel exports to the US within an annual quota of 4 million tons, while steel exports exceeding this quota would continue to face a 50% tariff.

This means that Canadian steel exporters are expected to receive partial tariff relief, though the reduction is less than what Canada had previously sought. In exchange, Canada has agreed to eliminate all retaliatory tariffs imposed on US steel and to further restrict steel imports from third countries. Meanwhile, both sides are still negotiating specific arrangements for industries such as aluminum, automobiles, and lumber, with final terms yet to be finalized.

## 4 Million Ton "Quota" in Exchange for 25% Tariff Rate

The Globe and Mail reported that a steel industry executive revealed the Canadian government has agreed to this steel tariff quota plan, allowing approximately **4 million tons** of Canadian steel to enter the US market annually at a lower tariff rate of 25%.

Once the 4 million ton quota is exhausted, subsequent steel exports will still be subject to a **50% tariff**, which is the current industry-wide tariff level imposed by the Trump administration on Canadian steel under Section 232 of the Trade Expansion Act.

Two other industry insiders familiar with the negotiations also confirmed that Ottawa and Washington have reached an agreement on the 25% tariff rate within the quota.

If ultimately implemented, this would mean that Canadian steel exporters could receive a 25 percentage point tariff reduction, at least within the 4 million ton quota.

However, The Globe and Mail also emphasized that US-Canada negotiations are ongoing, and related arrangements could still change.

For the Canadian steel industry, which has long borne the pressure of Trump's tariffs, this proposal offers a certain degree of buffer, but it does not completely resolve the tariff issue—**a 25% tariff must still be paid within the quota, while exports beyond the quota continue to face the high 50% tariff.**

## Higher Than the 10% to 15% Canada Previously Envisioned

Although the 25% in-quota rate is lower than the current 50%, it is actually higher than Canada's previous expectations.

The Globe and Mail stated that last autumn, both sides discussed providing tariff relief for the Canadian steel industry. At that time, industry sources revealed that the tariff rate within the quota under consideration might have been only **10% to 15%**.

If the final rate is determined to be 25%, it means the tariff concessions obtained by the Canadian steel industry are significantly smaller than previously envisioned.

More importantly, Canada also needs to make accompanying concessions.

According to reports, Ottawa has agreed to cancel **all retaliatory tariffs** imposed by Canada on US steel and to further restrict steel imports from third countries.

In other words, the US is not unilaterally lowering tariffs; rather, it is adjusting partial tariff treatment for Canadian steel in exchange for policy concessions from Canada, such as tightening steel imports and eliminating retaliatory tariffs.

## Progress in Autos, But Canadian Demands Not Fully Met

Automobiles are another core area of these negotiations.

The Globe and Mail reported that Ottawa also seems to have accepted the US position on automotive tariffs. The media outlet previously reported that the US had agreed to reduce the tariff on Canadian cars from 25% to **15%**, but Canada's push for a broader "North American content" exemption was not fully satisfied.

Specifically, the US side only agreed to grant tariff exemptions for **US-origin content** in vehicles, rather than the content exemption covering the entire North American supply chain that Canada had hoped for.

Therefore, although Canadian cars face a lower nominal tariff, the actual effective tax rate may still be significantly higher than the surface rate of 15%.

Citing estimates from multiple automotive industry experts, The Globe and Mail stated that if US content is exempted, the average effective tariff rate for Canadian cars could be around **7.5%**.

Industry experts believe this level is still too high to ensure the long-term competitiveness of the Canadian automotive industry.

## Aluminum, Lumber, and Furniture Still Under Negotiation

In addition to steel and automobiles, Canada is also striving for the US to lower tariffs on its aluminum products.

The Globe and Mail reported that both sides are currently negotiating aluminum trade arrangements, with the goal of reducing relevant tariffs.

However, there is still significant uncertainty regarding whether the lumber and furniture industries can obtain tariff reductions.

Canada is pushing for the US to lower tariffs on Canadian lumber and furniture, but as of Thursday, the US side remained cautious about including the lumber issue in this trade agreement.

This means that, so far, steel and automobiles are the two key industries where clearer proposals have emerged in the negotiations, while final arrangements for aluminum, lumber, and furniture remain to be seen.

## Deadline Approaches as Trump Threatens Additional 50% Tariff

The reason these negotiations have entered the final sprint is directly related to the latest deadline set by the US.

On Friday local time, Dominic LeBlanc, Canada's Minister responsible for US-Canada trade affairs, and Chief Negotiator Janice Charette, will continue consultations in Washington with US Trade Representative Greer. The Globe and Mail stated that these talks are just hours away from the latest agreement deadline.

US President Trump previously threatened that **if the US and Canada fail to reach an agreement before the deadline of 00:01 ET on Saturday, the 22nd, the US will impose an additional 50% tariff on approximately $20 billion worth of Canadian goods**.

Earlier this week, Trump suspended the 50% tariff measures on certain Canadian goods for three days to buy time for both sides to finalize the agreement. The US had originally planned for these tariff measures to take effect earlier.

LeBlanc, who is responsible for US trade affairs for Canada, stated on Thursday that both sides were "very close" to reaching an agreement.

Therefore, Friday's negotiations are likely to be the critical window for determining whether both sides can finalize the agreement before the deadline.

## Earlier This Week, Reports Emerged of US Plans to Lower Steel, Aluminum, and Auto Tariffs

In fact, the steel proposal disclosed by The Globe and Mail this time corroborates signals released by the media earlier this week.

The Wall Street Journal reported this week that the US is considering reducing tariffs on Canadian steel and aluminum from the current 50% to 25%, while simultaneously lowering automotive tariffs from 25% to 15%. However, the report at the time emphasized that the agreement had not yet been finalized, and specific terms could still change.

The 4 million ton steel TRQ plan further disclosed by The Globe and Mail on Friday provided a more specific implementation framework for the previously vague "reduction to 25%":

**Not all Canadian steel will directly enjoy a 25% tariff; instead, the 25% rate applies to volumes within the annual 4 million ton limit, with the excess remaining at 50%.**

This means that the Canadian steel industry is not receiving a comprehensive tax cut, but rather a tariff concession window with a clear quantitative cap.

## Carney Government Faces Domestic Pressure

Meanwhile, the series of concessions in the potential agreement have also put Canadian Prime Minister Carney under domestic political pressure.

In exchange for the US lowering tariffs in certain industries, Canada needs to respond to multiple trade demands raised by the US, including restoring the sale of US alcoholic beverages in Canadian provinces, removing certain government procurement restrictions on US companies, and eliminating retaliatory tariffs on US automobiles.

The US has also requested that Canada make further arrangements in areas such as dairy products, critical minerals, military procurement, and energy exports.

The Globe and Mail pointed out that, as part of the conditions for the US to lower tariffs, Carney has requested provincial governments to repurchase and restore the sales of US alcoholic beverages in local retail channels, while simultaneously removing certain procurement restrictions on US companies.

The US has also requested that Canada give the US priority in purchasing Canadian critical minerals, complete the purchase of F-35 fighter jets, purchase US military equipment when joining the US "Golden Dome" missile defense system, and increase oil exports to the US.

Therefore, this potential agreement is not simply a case of "the US lowers taxes, and Canada lowers taxes" for Canada; rather, it resembles Canada exchanging a series of concessions in market access, procurement, and supply chains for limited tariff reductions by the US in certain industries.

## "Accept High Tariffs" or Continue to Strive?

The final content of the agreement has also sparked debate within Canada.

Manitoba Premier Wab Kinew believes that if Canada accepts the long-term existence of Trump's tariffs now, it may weaken Canada's negotiating leverage when revisiting the US-Mexico-Canada Agreement (USMCA) later this year or early next year.

"If we continue to apply pressure, I think we might get more," Kinew previously stated.

Conservative Party Leader Pierre Poilievre has also publicly urged Carney not to accept an "unfair agreement," warning that unilateral tariffs could place Canadian companies at a competitive disadvantage.

For the Carney government, the truly tricky aspect is that if the currently disclosed plan is ultimately accepted, although the Canadian steel industry can escape the full pressure of the 50% tariff, it must still accept a tariff structure of 25% within the quota and 50% for excess volumes; the actual effective tariff for the automotive industry may also remain around 7.5%.

In exchange, Canada must make concessions in multiple areas, including steel retaliatory tariffs, third-country steel imports, US alcohol, dairy products, critical minerals, military procurement, and energy exports.

As the deadline approaches, US-Canada negotiations have entered a decisive stage. **Whether the 4 million ton steel quota and the 25% in-quota tariff rate will ultimately be written into the agreement, how the 15% automotive tariff and US content exemption will be implemented, and whether further reductions can be obtained for industries such as aluminum and lumber, will be key to the negotiations in the final few hours.**

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> **Disclaimer: This article is for reference only and does not constitute any investment advice.**