US, Canada fail to agree on auto tariff cut before Aug 19 deadline
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U.S. and Canadian trade negotiators failed to reach an agreement on auto tariffs in weekend and Monday talks in Washington, with Ottawa offering a 10% rate and Washington insisting on at least 15%. The two sides also remain divided over whether only U.S.-specific content or all North American content can be deducted from the current 25% Section 232 tariff. Canada says it will not take retaliatory measures until the new U.S. duties take effect, while negotiators face a Wednesday deadline for new duties on $20 billion in other Canadian goods.
Key Facts
- U.S. and Canadian trade negotiators discussed a potential cut in U.S. auto tariffs on Canadian vehicles to 15% after deductions, three sources said.
- Canada proposed lowering the tariff to 10%, while Washington insisted on a rate of at least 15%.
- Washington wants only U.S.-specific content deducted, but Ottawa is pressing for all North American content, including Canadian and Mexican parts.
- Auto industry officials said a broader regional content deduction would push the effective U.S. tariff rate on North American-built vehicles down to single digits.
- Trump previously announced additional 50% tariffs on selected Canadian goods, excluding energy, potash, seafood and critical minerals, with the increase set for Aug. 19.
Washington Talks
U.S. and Canadian representatives held talks in Washington over the weekend and continued discussions on Monday. The two sides did not reach an agreement on automobile tariffs. Canada proposed a 10% auto tariff, while Washington insisted on a floor of 15%. Negotiators face a Wednesday deadline for new U.S. duties on $20 billion worth of other Canadian goods.
Tariff Content Dispute
Washington wants only the value of U.S.-specific content to be deducted from the auto tariff, in line with current U.S. practice. Canadian negotiators are pushing for all North American content, including parts from Canada and Mexico, to be deductible. Auto industry officials said that broader regional content deduction would push the effective U.S. tariff rate on North American-built vehicles down to single digits. That would be well below the 15% rate under discussion and the current 25% Section 232 tariff on auto imports.
Canadian Retaliation Readiness
Prime Minister Mark Carney said Ottawa is ready for retaliatory steps. Canada will not take any measures until the U.S. tariffs officially take effect, Carney said. Trump previously announced additional 50% tariffs on selected Canadian goods, excluding energy, potash, seafood and critical minerals, with the increase set for Aug. 19.
2 sources
US, Canada fail to agree on auto tariff cut before Aug 19 deadline
