OTTAWA (Reuters) -- The United States and Canada are working on a deal to ease US tariffs on Canadian steel and autos, two US and four Canadian sources said, as the two governments try to repair relations that soured after trade talks broke down in August.
The talks focus on tariffs imposed under Section 232 of US trade law, including up to 50 percent tariff on Canadian steel and a 25 percent tariff on autos, with negotiators discussing potential relief from those duties.
Just 32 percent of Americans approve of US President Donald Trump and his Republican Party risks losing control of Congress in next week's midterm elections. Tariffs on Canadian imports have become a political liability for Trump, with Republican candidates in border states calling for an end to the trade war with Canada.
One Canadian source briefed on the negotiations said a deal on steel and auto tariffs was possible before the November 3 elections, while US sources said the Trump administration wanted Canada to make further concessions. The sources spoke on condition of anonymity because the talks are private.
The Section 232 tariffs are administered by the Commerce Department, putting Commerce Secretary Howard Lutnick rather than the US Trade Representative's office at the center of the negotiations, sources on both sides of the border said.
Lutnick and Canada's Dominic LeBlanc, the minister responsible for Canada-US trade, have been in regular contact recently, one of the sources said.
"Canada remains in constructive dialogue with our US counterparts on a range of priorities," a spokesperson for LeBlanc, said in a statement. "We stand ready to work constructively and in good faith towards a more mutually beneficial trading relationship that respects Canada’s interests.”
The US Trade Representative's Office and Canada have also been in contact in recent days regarding the overall architecture of any deal and all other trade issues, a USTR official said.
Canadian Prime Minister Mark Carney said there had been "a slight intensification" in talks with the United States, adding that Ottawa had not changed its stance.
"To the extent any progress has been made, it's because the US is coming closer to our position," he told reporters, but did not give details.
A Canadian industry source said a deal could come quickly, but not necessarily a broad one. "If it happens, it'll happen fast. But my sense is it'll be a narrowed deal, if it even happens,” the source said.
Another Canadian source said they have believed for some time that a deal on Section 232 tariffs is likely before the midterms. Any agreement would be driven by Trump and Carney, the source said, adding that both leaders had said a mutually beneficial deal is possible.
Carney has said he wants a good deal for Canada.
US and Canadian trade talks collapsed in August over issues such as whether to cut duties on medium- and heavy-duty vehicles that are critical for Canadian factories. US automakers had hoped the trade talks would deliver relief from Washington's original 25 percent tariffs that have raised the cost of shipping vehicles and parts across the border.
Trump has previously announced that he would raise the tariffs on steel and auto imports from Canada to 50 percent from Jan. 1, 2027. At a political rally Sunday, Trump predicted the trade dispute would be resolved "soon," without providing specifics.
Trump signed an order Friday to remove 50 percent tariffs on some Canadian agricultural and forestry products in a move that could benefit businesses in Maine.