After Canada fires back with retaliatory tariffs, Trump and Carney move to ease trade war in 2 sectors as South Africa braces for U.S. duty slap

Washington and Ottawa are currently negotiating an agreement to lower U.S. duties on Canadian automotive and steel imports, aiming to de-escalate cross-border trade tensions after previous talks broke down.

• Washington and Ottawa are negotiating to reduce U.S. tariffs on Canadian steel and automotive imports to ease recent trade tensions.
• Talks focus on targeted relief from Section 232 duties, which now impose up to 50% levies on Canadian steel and 25% on vehicles.
• Canada had previously imposed heavy retaliatory tariffs on about $20 billion worth of U.S. goods, especially targeting politically sensitive areas.
• Meanwhile, South Africa may lose its preferential trade access to the U.S. under AGOA, risking major economic impact, especially in automotive manufacturing.

According to sources cited by Reuters, government officials are actively discussing targeted relief from Section 232 duties, which currently include levies of up to 50% on Canadian steel and 25% on motor vehicles.

The prospective agreement marks a shift toward diplomacy after months of escalating trade measures between the neighboring economies.

The U.S. and Canada seek common ground on steel and auto tariffs

High-level negotiations between Washington and Ottawa have intensified as both governments attempt to reach a narrowed agreement ahead of upcoming U.S. midterm elections.

U.S. Commerce Secretary Howard Lutnick and Canadian Minister Dominic LeBlanc have maintained regular contact to negotiate duty relief.

Canadian Prime Minister Mark Carney confirmed a "slight intensification" in bilateral talks, stating, "To the extent any progress has been made, it's because the US is coming closer to our position," according to Reuters.

As reported by Business Insider Africa in August, Carney had previously pledged that Ottawa would respond to American trade penalties "dollar for dollar".

Before the current negotiations gained momentum, Canada enacted heavy retaliatory tariffs of up to 50% on roughly 700 American products, covering approximately $20 billion in annual imports.

Canadian Trade Minister Mélanie Joly explained in reports published by Business Insider Africa that Ottawa specifically selected goods from U.S. states supporting President Donald Trump to maximize political impact.

Joly noted that while Canadian officials held "a lot of good cards," they elected not to deploy their most severe economic measures immediately.

South Africa faces potential trade fallout as U.S. AGOA decision looms

While North American partners negotiate duty relief, South Africa is bracing for a potential trade breakup with the United States as executive approval for its continued access under the African Growth and Opportunity Act (AGOA) remains uncertain.

Although the U.S. Congress voted to extend South Africa's duty-free market access through 2028, final authorization rests with President Donald Trump amid diplomatic tensions over land reform and discrimination claims.

Addressing the nation, South African President Cyril Ramaphosa warned citizens about the pending decision, stating, "Congress has decided that we should be kept in AGOA. What now remains is the executive," while adding, "if we ever have a choice, we are not the first and only country to be taken out of AGOA. And I believe we will not be the last."

The loss of preferential market access threatens severe consequences for South Africa's economy, particularly its automotive manufacturing sector.

According to data from the national automobile manufacturing body Naamsa cited by Business Insider Africa, roughly 86,000 direct manufacturing jobs and over 125,000 total positions rely directly on the trade agreement.

President Ramaphosa called losing duty-free trade access "devastating," but he urged South Africans to stay resilient.

According to Business Insider Africa, he stated, "I need, as president, to prepare us if it ever happens. So we should not go out and jump off tall buildings and think that this is the end of the world."