• US and Canada intensify talks to ease steel and auto tariffs ahead of the November 3 midterm elections, but Canadian officials caution that key issues remain unresolved.
  • Washington announced exemptions for selected Canadian products effective October 30 while adding others to the 50% tariff list, a redistribution of coverage rather than a broad settlement.
  • A limited agreement could still emerge quickly, but without a published implementing order, the headline is a potential catalyst, not a confirmed earnings benefit for automakers and steel producers.

Fragile Prospects for a Pre-Election Breakthrough

Efforts to reset the US-Canada trade relationship have hit a snag, with officials in Ottawa pouring cold water on expectations of an imminent breakthrough despite optimistic signals from Washington. President Donald Trump said on October 25 that the dispute would be settled "pretty soon," while National Economic Council Director Kevin Hassett described an agreement as "very close," noting that Commerce Secretary Howard Lutnick had been speaking with Canadian counterparts. Neither disclosed agreed terms.

Canadian Chief Trade Negotiator Janice Charette offered a more measured assessment: "pens are down, and the doors are open." Her comment suggests that contacts are taking place but that discussions about returning to detailed negotiations are not the same as a completed negotiating process. People familiar with the matter told CBC that important issues remain unresolved and "we are not on the verge of an agreement just yet."

What's Actually on the Table

The headline figures—50% steel tariffs and 25% auto tariffs—are useful shorthand but should not be treated as uniform effective rates on every shipment. US steel tariffs were increased from 25% to 50% in June 2025, and subsequent changes have altered coverage and treatment of metal-containing products. For Canadian-assembled vehicles, the 25% auto tariff generally applies to non-US content when vehicles qualify under USMCA, with eligible parts subject to separate exemptions.

On October 23, Washington announced exemptions for selected Canadian products effective October 30, while adding other products to its 50% tariff list. That move represents a redistribution of tariff coverage, not the broad steel-and-auto settlement contemplated by the headline. The Globe and Mail reported that an earlier, unsuccessful August package contemplated a permanent 15% tariff on non-US content in Canadian-assembled automobiles, versus the current 25% rate—background to the talks, not a newly agreed rate.

Industry Braces for Impact

The four companies most directly in the crosshairs—General Motors (GM), Ford (F), Stellantis (STLA) and Cleveland-Cliffs (CLF)—are exposed differently. GM reported third-quarter 2026 revenue of $50.0 billion, up 2.9%, with adjusted EBIT of $4.1 billion, up 21.6%. Ford posted second-quarter revenue of $48.3 billion and adjusted EBIT of $2.5 billion, though it recorded a $1.3 billion net loss after $4.2 billion in pretax special items tied largely to its BlueOval SK battery joint venture restructuring. Stellantis, navigating its FaSTLAne 2030 strategy under CEO Antonio Filosa, saw second-quarter revenue rise 13% to €43.5 billion, but is still recovering from a €22.3 billion net loss in 2025 and suspended its 2026 dividend.

Cleveland-Cliffs, the major North American steelmaker, reported third-quarter 2026 revenue of $5.6 billion, up 18.5%, and net income of $165 million versus a year-earlier loss. The company postponed a Burns Harbor blast-furnace relining by a year amid stronger automotive demand and tariff-supported market conditions. For Cliffs, the implications of tariff relief are mixed: more Canadian steel competition could pressure US pricing, but healthier North American auto production could strengthen steel demand. Automakers would benefit from lower duties on qualifying cross-border vehicles and potentially lower steel input costs, though the benefit would vary with production location, sourcing and Canadian counter-tariffs.

Political Pressure Mounts

The November 3 election gives Washington a reason to announce progress, particularly in northern manufacturing and border states. Maine Senator Susan Collins claimed credit for exemptions on products important to her state's agricultural sector. However, the administration simultaneously added tariffs elsewhere, limiting the significance of those exemptions as evidence of broader de-escalation. Former Obama strategist David Axelrod suggested an eleventh-hour agreement could help Republican Senate candidates in northern states—political analysis, not confirmation of an administration decision.

The dispute also sits alongside uncertainty over USMCA's future. According to Blakes' legal timeline, the July 2026 review did not produce US agreement to extend the pact for another 16 years. The agreement remains in force until 2036, but annual reviews are now required unless the parties agree to an extension.

What to Watch

Without a published agreement or implementing order specifying rates, content treatment, quotas, effective dates and reciprocal obligations, the headline remains a potential catalyst rather than a confirmed earnings benefit. Trump has threatened 50% tariffs on Canadian cars, trucks, auto parts and steel from January 1, 2027, though Canadian Trade Minister Dominic LeBlanc said last week that Washington had not formally implemented the threatened auto increase. Canada, for its part, imposed tariffs of 15%, 25% and 50% on approximately C$27.6 billion of US imports from September 8, covering products including steel, dairy, appliances, agricultural equipment and electronics.

Auto-parts association president Flavio Volpe sees a possible opening because Trump has shown flexibility for electoral reasons, but says the outcome is unclear. That cautious industry assessment is more consistent with the available evidence than treating a deal as imminent. Requests for comment from the US Trade Representative's office and Global Affairs Canada were not immediately returned.

Clarification: An earlier version of this article misstated the effective date of the October 23 exemptions. They take effect October 30.