Canadian Prime Minister Mark Carney confirmed that negotiations are underway between Canada and the United States to address issues in sectors affected by tariffs, following a “very constructive” conversation with President Donald Trump on Monday evening, as reported by Bloomberg. Additional meetings are taking place in Washington involving officials, including Canada’s top civil servant Michael Sabia.

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Carney indicated that agreements are expected in some strategic sectors, specifically naming autos, steel, and aluminum, which have been targeted by U.S. tariffs. However, he cautioned that a swift resolution is unlikely, stating, “Don’t expect immediate white smoke on one of these strategic sectors.” The Monday call between Carney and Trump was not previously disclosed by either office.

The urgency for Canada is heightened by its significant exposure to the industries targeted by U.S. protectionist policies. Data from the IndexBox platform highlights the depth of this integration: more than 90% of Canada’s iron, steel, and aluminum exports are destined for the United States. This makes the sectors acutely vulnerable to the 50% tariffs on foreign steel and aluminum imposed by the Trump administration. President Trump raised certain tariffs on Canada to 35% from 25% on August 1, though he maintained an exception for a broad range of products traded under the US-Mexico-Canada Agreement.

While Canada initially responded with a 25% counter-tariff on U.S. metals, it removed a range of other retaliatory measures in August as it seeks a deal. The impact is bilateral; U.S. carmakers have also suffered from the tariffs, leading to protests from Detroit executives and subsequent exemptions for some auto parts made in North America.

Many of the tariffs face legal challenges after a U.S. court declared them illegal on August 29, though they remain in effect as the administration appeals to the Supreme Court. Separately, Carney noted the government is also seeking to resolve trade frictions with China, which imposed tariffs on Canadian agricultural goods like canola and pork after Canada levied duties on Chinese electric vehicles, steel, and aluminum.

Source: IndexBox Market Intelligence Platform