• A potential trade deal between Canada and the United States would resolve tariff disputes on steel, aluminum, and energy.
  • Canada would accept export quotas for steel in exchange for reduced U.S. tariffs, according to people familiar with the negotiations.
  • The breakthrough follows months of economic damage from the 2025 trade war, which began when the U.S. imposed wide-ranging tariffs and Canada immediately retaliated.

Senior Canadian finance official Dominic LeBlanc expressed surprise Thursday at reports that Canada and the United States are nearing a major trade agreement, just months after a bitter tariff war began causing economic damage on both sides of the border.

According to people familiar with the matter, negotiators have made significant progress toward a deal that would center on resolving disputes in the steel, aluminum, and energy sectors. The agreement, which could be signed at the upcoming APEC summit, would see Canada accept export quotas for steel in exchange for substantially reduced U.S. tariffs.

"I must confess I was somewhat surprised by the speed indicated in these reports," LeBlanc told reporters in Ottawa, while acknowledging that talks have been "productive and constructive." He declined to comment on specific terms but confirmed that aluminum and energy cooperation are key components of the ongoing discussions.

The negotiations come against the backdrop of the 2025 trade war that began when the Trump administration imposed sweeping tariffs on Canadian goods, prompting immediate retaliation from Ottawa. While most goods between the two countries returned to free trade under CUSMA starting September 1, tariffs on steel, aluminum, and autos have remained in place, creating headaches for manufacturers and driving up costs for consumers.

Efforts to restructure the trade relationship have gained urgency under new Canadian Prime Minister Mark Carney, who has prioritized de-escalating the trade war while defending Canadian interests. The Trump administration's unprecedented suggestions about dissolving bilateral agreements and even removing Canada from defense and intelligence-sharing platforms had heightened tensions to levels not seen in decades.

Critical minerals, a sector of significant interest to the United States for securing supply chains, are notably absent from the current negotiations, according to two people briefed on the talks. This exclusion has sparked concern among some industry observers who see it as a missed opportunity.

A deal would provide immediate relief to businesses and workers in affected industries, particularly manufacturing, construction, and the automotive sector, which have faced compounded pressures from simultaneous trade disputes with China. Market analysts suggest an agreement could restore stability to North American supply chains that have been disrupted since the tariffs took effect.

Attempts to reach spokespeople for the U.S. Trade Representative's office were unsuccessful Thursday afternoon. The White House has not commented publicly on the status of negotiations.

Correction: An earlier version of this article misstated the timeline for when most goods returned to free trade under CUSMA. This occurred on September 1, 2025.