Mark Carney nears trade pact with US as Trump pauses $20.2B tariff threat

Canada and the US are inching toward a bilateral trade deal after President Donald Trump paused a planned 50% tariff on roughly $20.2 billion worth of Canadian exports. The pause, announced on August 19, gives negotiators until August 22 to finalize the agreement.

Canadian Prime Minister Mark Carney is now trying to sell his country on a deal that would keep some US tariffs in place but reduce others meaningfully, framing the arrangement as the price of long-term economic stability. It’s a tough pitch in a country where polls suggest voters aren’t eager to make concessions to Washington.

What’s on the table

The tentative deal reportedly includes a cut in US tariffs on steel and aluminum from 50% down to 25%. Auto tariffs on non-US content would drop from 25% to 15%.

The exports under the tariff threat include electronics, machinery, furniture, and dairy products.

Negotiations have been led by Canadian Trade Minister Dominic LeBlanc and US Trade Representative Jamieson Greer, with talks centered on the sectors that generate the most friction: autos, steel, aluminum, dairy, and alcohol distribution.

Carney briefed Canadian premiers on August 19 as talks continued, signaling that the federal government wants provincial leaders on board before any final announcement. Industry groups across the country are watching closely, particularly those with supply chains that cross the border multiple times before a product reaches a consumer.

The bigger picture

This deal, if finalized, would represent a partial reset of Canada-US trade relations that have been volatile since 2025. Carney won his election partly on the promise that he could manage the Trump-era tariff regime more effectively than his predecessors. Multiple rounds of negotiations have followed, each one producing incremental movement but no comprehensive resolution.

Over 85% of Canada-US trade is tariff-free under USMCA commitments (known as CUSMA in Canada). The dispute has always been about specific sectors where tariffs persist and where political pressure on both sides makes compromise difficult.

For Carney, the challenge is framing a deal that includes ongoing tariffs as a win. His argument centers on certainty: businesses can plan around a 25% steel tariff but cannot plan around the possibility that tariffs might jump to 50% on three days’ notice.

What this means for markets and supply chains

The auto sector is the most obvious beneficiary if this deal closes. A reduction from 25% to 15% on non-US content changes the math for manufacturers with integrated North American supply chains. Parts that cross the border multiple times during production accumulate tariff costs at each step, so even a 10-percentage-point reduction compounds into meaningful savings.

Steel and aluminum producers on both sides face a more mixed outcome. A 25% tariff is still significant, but the alternative—a 50% levy—would have been genuinely disruptive for Canadian producers who depend on US demand.

The August 22 deadline leaves almost no margin for last-minute complications. Dairy quotas, rules-of-origin calculations for auto parts, and provincial alcohol regulations are among the issues that could become sticking points before the clock runs out.

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