Two Canadian trade sources said that some automakers are urging the federal and Ontario governments to prioritize reaching an agreement instead of a hardline opposition to a higher rate for larger vehicles such as Ford’s F-350 series, which is manufactured in Oakville, Ont.
Some figures in auto sector are telling Canadian trade negotiators that elevated American tariffs on heavy duty vehicles shouldn’t be treated as a deal breaker while urging reaching a new agreement to stave off hefty new levies set to go into effect on Jan. 1, iPolitics has learned.
Two Canadian trade sources, who asked not to be identified because they’re not authorized to speak publicly, said that some automakers are urging the federal and Ontario governments to prioritize reaching an agreement instead of a hardline opposition to a higher rate for larger vehicles such as Ford’s F-350 series, which is manufactured in Oakville, Ont.
Back in August, the two sides appeared close to a deal that would reduce U.S. auto tariffs from 25 to 15 per cent, among other changes. But it was later discovered that the Americans weren’t intending to apply that tariff rate to heavy duty vehicles.
One trade source told iPolitics in August that was a major factor in derailing negotiations, as Canada eventually exited talks, citing unreasonable, last-minute demands from the Americans.
In response, U.S. President Donald Trump vowed to increase auto tariffs to 50 per cent starting on Jan. 1.
READ MORE: Lutnick accuses Canada of deliberately scuttling trade talks
Multiple media outlets have reported that the two sides are back at the table for the first substantive talks since August.
Both trade sources cautioned that it still remains difficult to predict if Canada and the U.S. can agree to a deal, though acknowledged that the Americans have softened their tone in discussions.
They also said that pressure is mounting on the Canadians to broker a deal as businesses struggle against existing levies and worry about permanently severing relationships with American buyers.
While some in Canada are warning that accepting a deal with tariffs would lock in that rate, one source warned that could happen if no deal is reached and the Americans impose even higher levies.
“For those that are saying don’t don’t take a deal that’s less than perfect and then lock in that new number, there are other people that are saying if you don’t make progress, you’re locking in the higher number that we’re at now, and maybe an even higher number on Jan. 1.”
More to come…