By Promit Mukherjee and David Shepardson
OTTAWA/ WASHINGTON, Aug 20 (Reuters) - Canada and the United States are "very close" to agreeing a trade deal that could help reduce months of tariffs and counter duties but more work remains to be done, a top Canadian official said on Thursday.
Dominic LeBlanc, the minister responsible for trade with the U.S., was speaking after he met U.S. Trade Representative Jamieson Greer in Washington.
The two sides are trying to meet a deadline set by U.S. President Donald
Trump, who says he will impose a new 50% tariff on about $20 billion worth of Canadian goods at 12:01 a.m. EDT (0401 GMT) on Saturday.
A deal could mark a detente in what has been nearly two years of tense relations between two long-time allies and major trading partners, and allow broader negotiations on renewing the U.S.-Mexico-Canada trade agreement to move forward.
"We're very close. We continue to make progress and we're going to stay here and do the work that's necessary," LeBlanc told reporters.
LeBlanc and Canada's chief trade negotiator, Janice Charette, met Greer for more than three hours. Stepping out of the USTR's office, LeBlanc said Charette would continue the talks.
The proposed deal is expected to cut the top-line tariff on Canadian-built vehicles to 15% from 25% and halve tariffs on Canadian steel and aluminum to 25%, sources said.
The White House and USTR have been contacted for comment.
A key question remaining is around implementation and whether all USMCA or Canadian content will be counted against tariffs or if the U.S. will be able to change the rules.
Another issue is whether the U.S. will approve Canadian content per vehicle or if it will simply be counted more broadly. The two sides are also discussing whether the U.S. will reduce the current cap on parts that can be exempted from the top line tariff rate.
The talks in Washington are aimed at getting more concrete details on the implementation of the rate and how the content will be calculated, one of the sources said.
Trump had initially set the tariffs to take effect on Wednesday before giving the two sides a three-day extension to complete negotiations and expressing hope that a deal was likely.
Unlike many of Trump's earlier tariffs, the new duties would apply even to products that qualify for preferential treatment under the U.S.-Mexico-Canada Agreement, which has shielded much of Canadian trade from tariffs, posing an added risk to Canada's economy.
Trump said on Wednesday that Washington would make some tariff concessions and suggested that an agreement would also remove Canadian tariffs on U.S. goods.
Several leaders of Canada's 10 provinces said Carney had urged them to end restrictions on the sale of U.S. alcohol, a particular irritant for Washington, if Canada reaches a deal with the United States. Most provinces stopped distributing U.S. alcohol products in response to tariffs Trump imposed on goods from Canada last year, and many Canadians have pledged not to buy U.S. alcohol even if it returns to store shelves.
(Reporting by Promit Mukherjee, David Shepardson and David Lawder; Editing by David Ljunggren, Caroline Stauffer, Mark Porter and Sonali Paul)
