Negotiations continue ahead of midnight tariffs on $20 billion of Canadian imports, threatening auto and supply chain stability.
Canada and the US face a midnight deadline to avert 50% tariffs on $20 billion of Canadian imports, including autos, lumber, and dairy. Failure to reach a deal risks disrupting North American trade flows and broader USMCA negotiations, which have underpinned regional stability for years.
The auto sector remains the most vulnerable, with industry warnings that even a 15% tariff would strain profit margins of just 6%. Roughly half the value of Canadian-built vehicles originates in the US, meaning tariffs could harm American manufacturers as well. Markets with exposure to Canadian exporters, particularly in materials and agriculture, are closely monitoring developments.
A last-minute agreement to reduce auto tariffs could ease supply chain concerns, while a breakdown may trigger retaliatory measures and prolonged trade disruptions. Officials have discussed cutting Section 232 tariffs, but no clarity has emerged from recent high-level talks.