Reports quoting people close to the negotiations say that, as a result of the deal under discussion, the highest US tariff on Canadian steel and aluminium would be reduced from 50 percent to 25 percent.

The lower steel tariff is likely to involve a quota system which will limit the quantity of Canadian steel entering the United States, but the exact details are still being worked out.

Cars are also included in the negotiations

It has been reported that both nations have agreed to reduce the highest US tariff on vehicles made in Canada from 25 per cent to 15 per cent.

This rate is determined before the value of US-made parts in Canadian cars is deducted, meaning the actual tariff on certain vehicles could be considerably lower.

Talks continue after tariff pause

The discussions began after U.S. President Donald Trump decided to suspend a new round of 50 per cent tariffs on certain Canadian products for three days; this suspension gives both countries more time to reach an agreement.

If an agreement is not reached, the higher US tariffs could affect Canadian products worth about $20 billion (€17.2 billion).

The higher tariffs would not only apply to steel and aluminium but also to a number of other products, such as cement, wine, beer, car parts, and even ice hockey sticks; however, energy, potash, critical minerals, and fish are excluded.

Canada and the United States have one of the largest trading relationships in the world, particularly in the area of manufacturing; during the production process, parts and materials frequently cross the border several times, which means that tariffs applied at any stage can increase costs later on in the supply chain.

This is especially important for the car industry, where factories and suppliers in both countries are part of the same production network.

At present, the proposed tariff reduction is still being negotiated, and the final rates, particularly those related to steel quotas, will depend on the outcome of discussions between the two governments.