Trade negotiators from the US and Canada are reportedly working on a deal to soften the blow of President Donald Trump's automotive tariffs, with a key deadline set for Wednesday, Aug. 19.

Tariffs Down to 15%?

According to a Reuters report on Monday, citing unnamed sources, the talks are focused on trimming the proposed US tariffs on Canadian-built vehicles down to 15%, depending on how much US-sourced content goes into the manufacturing process.

Right now, the US slaps a 25% tariff on all auto imports under Section 232, a move that has already pushed automakers to rethink their supply chains.

The automotive tariffs are a major sticking point between Washington and Ottawa. The US wants tariff reductions to apply only to American content, while Canada is pushing for cuts on content sourced from all of North America. If they can find common ground, tariffs could potentially drop to single digits, the report said.

Other unresolved issues include US steel and aluminum tariffs, Canadian dairy quotas, and Canadian stores pulling American liquor off shelves.

Howard Lutnick Backs Auto Tariffs

Commerce Secretary Howard Lutnick is standing by the administration's tariff regime, arguing it's bringing manufacturing jobs back to the US auto sector. He also praised the domestic manufacturing push from Ford Motor Co. Ford (F) and Toyota Motor Corp Toyota (TM).

Ford CEO Jim Farley has been touting the company's domestic-focused strategy, including plans to build Lincoln SUVs in the US starting in 2030. However, he reportedly acknowledged that tariffs played a role in that production shift.

Elon Musk Touts Tesla's Domestic Content

Meanwhile, Tesla Inc. Tesla (TSLA) CEO Elon Musk is making the case that his company is the most "made in America" automaker, pointing to the 84% American content in its vehicles. He also said Tesla sources its parts domestically.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a MarketDash editor.