A draft deal would halve steel duties and cut the auto rate to 15%
US President Donald Trump has paused 50 percent tariffs on roughly US$20bn of Canadian goods for three days, pushing the deadline for a bilateral trade deal to the end of this week.
Trump announced the delay on Truth Social at 10:15 pm on Tuesday, about two hours before the duties were due to take effect, CNBC reported, tying the pause to a deal subject to the finalization of documents.
CNN reported that Prime Minister Mark Carney confirmed the postponement runs until the end of day on August 21, while Reuters reported negotiators face a 12:01 am eastern deadline on Saturday.
A White House proclamation released Tuesday night said senior executive branch officials had been told Canada committed to removing what Washington considers discriminatory treatment of US alcoholic beverages, cheese, and motor vehicles.
A source with knowledge of the forthcoming agreement told CBC News that US tariffs on Canadian steel and aluminum are being lowered from 50 percent to 25 percent, and that the headline rate on Canadian-built cars and trucks would fall from 25 percent to 15 percent.
Bloomberg reported, citing people familiar with the matter, that the auto reduction would apply to the non-US content in vehicles exported from Canada.
Two industry sources told Reuters the lower steel rate would apply only up to a quota, likely 4m metric tonnes a year, with volumes above that facing the original 50 percent rate.
BMO Economics senior economist Shelly Kaushik and deputy chief economist Michael Gregory estimated the tariffs could cut annual real gross domestic product (GDP) growth by roughly 0.5 percentage points if implemented in full, according to the Financial Post.
TD Economics director and senior economist Andrew Hencic put the hit at 0.3 to 0.6 percentage points over the next year, the outlet reported, while a Desjardins analysis found a 0.2 percentage point reduction in 2026.
The Bank of Canada's July Monetary Policy Report, published before the tariffs were announced, projected real GDP growth rising from 0.7 percent in 2026 to about 1.8 percent in 2027 and 2028.
An RBC Economics analysis estimated the duties could affect around 20 percent of production and jobs in the manufacturing sectors covered, including apparel, electrical equipment and appliances, and textile mill products, according to the Financial Post.
Statistics Canada data cited by the same outlet shows manufacturing has shed 14,600 jobs since July of last year, a 0.8 percent decrease.
A report Oxford Economics prepared for the Canadian American Business Council projected 102,000 Canadian and 214,000 US job losses if the Canada-United States-Mexico Agreement (CUSMA) breaks down, against gains of roughly 98,000 Canadian and 137,000 US jobs if the pact is successfully renegotiated.
RBC Economics assistant chief economist Nathan Janzen said US tariffs raise prices for US importers, who pass costs to consumers, and told the Financial Post that Canadian counter-tariffs are where domestic price effects would appear.
CIBC Capital Markets executive director and senior economist Andrew Grantham said retaliation could lift Canadian consumer prices in the near term.
"Longer term, that actually has a disinflationary pressure for the Canadian economy," Grantham said in an interview with the outlet.
A Leger poll released Wednesday showed 56 percent of Canadians want Carney to make no further concessions to the US, Reuters reported.
Carney briefed the premiers Wednesday and asked provinces to return US beer, wine, and spirits to government-run liquor stores, Nova Scotia Premier Tim Houston told reporters in comments carried by CBC News.
"An extension doesn't bring the certainty that a signed interim deal would," Canadian Chamber of Commerce president and chief executive officer Candace Laing said in a statement reported by CBC News.
