Canada and U.S. Resume Talks Over Trump Tariffs as a New Deadline Looms

Canadian officials headed back to Washington on Thursday morning for another round of talks, in an effort to avert damaging new tariffs set to take effect Saturday morning and preserve Canada’s biggest trade relationship.

Dominic LeBlanc, the Canadian minister in charge of U.S. trade, and Janice Charette, the chief trade negotiator, met with Jamieson Greer, the U.S. trade representative, shortly after noon in Mr. Greer’s offices, Mr. LeBlanc’s office said.

Prime Minister Mark Carney of Canada and his officials must now decide whether to accept a proposed American trade deal that falls well short of what they are seeking, or risk the United States imposing 50 percent tariffs on tens of billions of dollars in Canadian exports.

On Tuesday night, President Trump suspended the sweeping new tariffs and announced that the two countries had reached a deal requiring only that some details and paperwork be worked out. But if Canada does not finalize the pact by early Saturday morning, new tariffs on about $20 billion worth of Canadian exports will take effect.

People in the United States and Canada who are familiar with the negotiations said talks are still very much underway and go well beyond tying off loose ends.

The sticking points center on the three key Canadian industries that Mr. Trump hit with tariffs of up to 50 percent last year: steel, aluminum and lumber.

In the talks, the U.S. has discussed reducing tariffs on some Canadian steel and aluminum exports to 25 percent from 50 percent, two people familiar with the plans said. That would still be about twice the rate Canada is seeking.

Canadian steel exports would also face a quota under which only a certain volume would qualify for the proposed lower tariff, another person familiar with the negotiations said. Domestically, the Trump administration is facing a backlash to the proposal from U.S. steel mills, which have argued that the change would undercut their production.

For the auto sector, a tariff that Mr. Trump imposed last year could be lowered to 15 percent from 25 percent, with a discount for the value of American parts, three other industry executives said.

One person briefed on the talks said that Canada is pushing back against the proposal on autos. He said it appeared that the United States picked 15 percent to match the tariff Mr. Trump imposed on Japanese and Korean autos. Because the U.S. side has been unyielding on the rate, the person said that Canada is proposing to effectively lower the tariff by giving credit for Canadian parts as well as American ones.

The Office of the U.S. Trade Representative and the White House did not immediately respond to a request for comment.

Mr. Trump’s current auto tariffs have shattered free trade in the sector, which dates to 1965 and has made the industry highly integrated across the border. Mr. Trump has repeatedly described Canadian-built autos as products that the United States should not import.

Negotiators have also been discussing important rules governing the North American auto industry under the United States-Mexico-Canada Agreement.

The Trump administration has proposed raising the requirement for how much of a car’s content must come from North America to 82 percent from the current 75 percent, as well as requiring 50 percent of a car’s materials to come from the United States. Canada and Mexico have both opposed the idea of a U.S.-specific content requirement. Industry executives say they view the U.S. proposal as an opening position that will likely be negotiated down.

Still, the U.S. effort to reorder the rules of the North American auto industry could be harmful to Canadian interests. Several people in the auto industry, as well as experts, say that a 15 percent tariff on autos will gradually doom the industry in Canada.

Historically, the auto trade between the two countries has had a slight surplus for the United States. Over the last decade or so, exports to Canada from the three Detroit-based automakers have declined considerably, leaving Toyota and Honda as by far the largest producers in the country.

Since Mr. Trump returned to office, Stellantis has moved production of a new Jeep from Ontario to Illinois, leaving a Canadian factory empty. General Motors closed an electric van factory and reduced its pickup truck blockembly line in Ontario to one shift. Honda canceled plans for a major expansion in Canada to produce electric vehicles and batteries but recently announced plans to build a new factory in the United States.

Flavio Volpe, the president of the Automotive Parts Manufacturers’ Association of Canada, said that after accounting for American parts, a 15 percent tariff effectively becomes a 7.5 percent tariff. But the profit margin on most autos is about 6 percent, he said.

He added that the U.S. content discount would likely force companies to source more American parts, to the detriment of the Canadian industry.

Greig Mordue, a former executive at Toyota’s Canadian manufacturing operations, said that a 10 percent tariff might make Canadian factories marginally profitable but would not halt their gradual disappearance, despite the difficulty and expense of moving production.

“It becomes a long-term bleed, “ he said, adding that with any auto tariffs, the “trajectory is not positive at any level.”

The outcome of talks between the United States and Canada has important implications for Mexico, which is negotiating separately with the Trump administration on the future of the U.S.M.C.A. Marcelo Ebrard, the Mexican economy secretary, returned to the U.S. trade representative’s office Wednesday for more discussions, following meetings the evening before.

Those talks centered on the sectoral tariffs that the Trump administration has levied on cars and car parts, as well as how the U.S.M.C.A. rules governing auto trade could change, a person familiar with the meetings said.

Canada does appear to have agreed to one U.S. demand: an end to the boycott of American wine and spirits by government-owned liquor systems in eight of 10 Canadian provinces.

In a virtual meeting with Canada’s premiers on Wednesday, Mr. Carney asked those who have banned the sale of U.S. liquor to restore it, according to Tim Houston, the premier of Nova Scotia.