The U.S. and Canada are reportedly on the verge of a trade deal that would significantly reduce tariffs on Canadian auto imports, with steel and aluminum tariffs also set to drop. According to a Reuters report on Wednesday, officials from both countries are close to an agreement that would cut the current 25% auto tariff to 15%, as the deadline for a deal looms.

Auto Tariffs: 15% Could Be Lower in Effect

The 15% figure, however, might not be the final effective rate. The tariff would be applied before deductions based on the volume of U.S.-sourced content in vehicles, which could bring the effective rate down further, the report said. This means that automakers with higher levels of American-made parts could see even lower tariffs.

Steel and aluminum tariffs are also expected to be reduced from the current 50% to 25%, but this reduction would be subject to a volume cap, likely set at 4 million metric tons, according to the report.

The White House and the Office of the Prime Minister of Canada did not immediately respond to MarketDash's request for comment.

The urgency is real: the U.S. and Canada must reach an agreement before Saturday at 12:01 a.m. EDT, after which tariffs on $20 billion worth of Canadian goods would automatically take effect. Notably, President Trump had already paused the 50% Canadian tariffs for three days to allow negotiations to continue.

Negotiations on Tariffs

Earlier reports indicated that trade officials from both countries were making progress. The U.S. had been pushing for a reduction in tariffs on American content, while Canadian officials advocated for a reduction on parts sourced from North America as a whole.

On the other side of the debate, Commerce Secretary Howard Lutnick defended the tariffs, arguing that they are bringing manufacturing jobs back to the U.S. auto sector from overseas. He also praised domestic efforts by Ford Motor Co. (F) and Toyota Motor Corp (TM).

Elon Musk Touts 84% American Content

Tesla Inc. (TSLA) CEO Elon Musk has been quick to highlight his company's American credentials, stating that Tesla is the most "made in America" automaker, with vehicles boasting 84% American content. Musk reaffirmed that Tesla sources its parts domestically rather than from overseas.

Meanwhile, Ford CEO Jim Farley has backed an overhaul of the U.S.-Mexico-Canada Agreement (USMCA), calling the agreement a crucial element of the automaker's business strategy.

As the deadline approaches, all eyes are on the negotiators. The outcome will not only affect the auto and steel industries but also signal the broader direction of U.S. trade policy under the current administration.