By Promit Mukherjee and David Shepardson
OTTAWA, Aug 19 (Reuters) - Canadian and U.S. trade negotiators met on Wednesday after President Donald Trump paused planned 50% tariffs on some Canadian goods for three days, as sources said auto tariff levels remained a sticking point.
The Canadian minister responsible for U.S. trade, Dominic LeBlanc, and Canada's chief trade negotiator Janice Charette met U.S. Trade Representative Jamieson Greer, LeBlanc's office said in a statement.
Trump said late on Tuesday
the two countries had a deal subject to the finalization of documents, but Canadian Prime Minister Mark Carney was more circumspect, saying substantial progress had been made while "important work" remained.
The negotiators face a new deadline of 12:01 a.m. ET (0401 GMT) on Saturday, when tariffs on $20 billion worth of Canadian goods are scheduled to take effect if there is no deal. Unlike previous tariffs, they would apply regardless of whether the goods qualify for preferential treatment under the U.S.-Mexico-Canada trade agreement.
TALKS ON CUTTING U.S. AUTO TARIFF
Automakers expect a final deal to sharply cut the 25% U.S. tariff on imported Canadian vehicles and parts. Two auto executives said Canada is pushing to reduce the tariff to 10%, instead of the U.S. offer of 15%. Goods from Japan, the European Union and South Korea are subject to 15% U.S. tariffs, while UK goods are subject to a 10% tariff. It is unclear if auto tariffs will be resolved this week or delayed until broader USMCA negotiations, along with other auto issues such as rules of origin.
The open question remains whether the U.S. will allow the value of regional content — from Mexico, the U.S. or Canada — to be deducted from the tariff or only allow deduction of the value of U.S. components from imported vehicles. Another open question is whether the reductions will apply to medium- and heavy-duty vehicles or only passenger cars and trucks. Canada wants the reductions to apply to all vehicles, the sources said.
A White House proclamation said senior U.S. officials had been told Canada had committed to remove what Washington considers discriminatory or unequal treatment of U.S. alcoholic beverages, cheese and motor vehicles.
The Canadian government has not confirmed those commitments or disclosed what concessions it has offered in exchange. A Leger poll found on Wednesday that 56% of Canadians want Carney to make no further concessions to the U.S.
"This limbo state is not anyone’s preferred outcome — time is of the essence," said Candace Laing, CEO of the Canadian Chamber of Commerce, a business group.
Charette's office told the Prime Minister's Advisory Committee on Canada-U.S. Economic Relations on Tuesday night that "given the sensitive and consequential nature of these discussions for Canada, there are no further details we are in a position to share," two sources said.
Greer, in a Tuesday night social media post, said the agreement would include comprehensive market access for all American goods, economic security commitments, digital trade alignment, and many important provisions, but gave no further details.
His office did not immediately respond to an email seeking further details.
KEYSTONE XL
Trump, in a Truth Social post announcing a pause on the planned tariffs, said the long-abandoned proposed Keystone XL oil pipeline from Alberta to the U.S. "may be awoken from the grave," without explaining whether it was an important part of the deal Canada and the U.S. were discussing.
In October, Carney had said reviving the pipeline could play a part in strengthening U.S.-Canada energy cooperation.
Former President Joe Biden canceled the pipeline, designed to carry Canadian crude to U.S. refineries, in 2021 after years of environmental and Indigenous opposition.
South Bow, the TC Energy spinoff that owns Keystone XL assets and is developing a new cross-border pipeline proposal using some of that infrastructure, declined to comment.
Trump imposed the measures under Section 338 of the Tariff Act of 1930 in response to Canadian policies covering U.S. alcohol, dairy products and automobiles.
(Reporting by Promit Mukherjee, additional reporting by David Ljunggren, Amanda Stephenson and David Shepardson ; Editing by Caroline Stauffer and Rod Nickel)
