US poised to cut Canadian auto tariffs to 15% from 25%

The US and Canada are closing in on a deal that would cut the tariff on Canadian-built vehicles from 25% to 15%, a move that could pull one of the sharpest thorns out of North American trade relations. The negotiations are unfolding against a ticking clock: new 50% tariffs on an additional $20B worth of Canadian goods are set to kick in imminently. If the two sides also agree to broaden content-based deductions to cover all North American parts, not just US-made components, the effective tariff rate on Canadian vehicles could drop to single digits. That would be a dramatic shift from the punitive posture the Trump administration adopted when it first imposed 25% levies under Section 232 national security authority in 2025. What’s on the table Canadian Prime Minister Mark Carney and Trump administration officials have been holding daily discussions covering autos, retaliatory tariffs, and the broader trade relationship. The talks intensified in the week leading up to August 17, 2026, driven largely by the approaching deadline for a second wave of duties that would dwarf the existing auto tariff in scope. The core sticking point is how to calculate content deductions. Canada wants cr...