United States Commerce Secretary Howard Lutnick has quietly revived Canada United States negotiations after an August collapse, with a narrow agenda covering Section 232 duties on steel, aluminum, lumber and autos. The 50 percent Section 338 tariffs on roughly 20 billion dollars of Canadian goods are not on the table.
OTTAWA, November 5, 2026
Canada United States trade negotiations have restarted after more than two months of silence, driven by the American cabinet officer Canadian negotiators blamed for ending the last round, and confined for now to the national security tariffs that have done the most damage to Canadian industry.
Yahoo Finance Canada reported on Wednesday, November 4, citing sources in both countries who spoke to CTV News, that Commerce Secretary Howard Lutnick began pressing to reopen talks a little over ten days ago. The report describes the current agenda as centred on Section 232 tariffs covering steel, aluminum, lumber and autos, with energy, including the Keystone XL pipeline and diesel exports, identified as a possible addition.
The revival comes in the same week that American voters handed Democrats control of both chambers of Congress, and four days after President Donald Trump told reporters in Dubuque, Iowa, on November 1 that the two sides have the “concept of a very good deal.”
Prime Minister Mark Carney signalled movement the same weekend. In a post on X, Carney described a “Good conversation with US President Donald Trump on the future of Canada U.S. trade” and said teams from both countries would work on the outcome “in the coming weeks.” Carney has also said publicly that he believes Trump is serious about reaching a deal, while cautioning that he cannot guarantee any agreement will be honoured.
What is on the agenda, and what is not
The scope of the restarted talks is the most consequential detail, because it determines which Canadian exporters would see relief and which would not.
Section 232 of the Trade Expansion Act of 1962 authorizes tariffs on national security grounds. The duties currently applied to Canada under that authority, as summarized in the Yahoo Finance Canada report, run up to 50 percent on steel, aluminum and copper products, charged on the full value of the product rather than on metal content alone. Automobiles and trucks face 25 percent, although vehicles qualifying under the Canada United States Mexico Agreement are charged only on their non American content. Softwood lumber carries an additional 10 percent on top of existing anti dumping and countervailing duties. Certain upholstered furniture, kitchen cabinets and vanities face 25 percent.
What is not on Lutnick’s current list is the Section 338 action. On August 22, 2026, the United States imposed 50 percent tariffs on a wide range of Canadian goods under Section 338 of the Tariff Act of 1930, a provision that had never previously been used. Those duties cover dairy, alcohol, furniture, electronics, wood products and clothing. Al Jazeera reported that the measure captures roughly 20 billion dollars of Canadian goods, about 5.5 percent of Canada’s exports.
Sources quoted in the CTV reporting left open the possibility that a broader round could extend beyond Section 232, but did not indicate whether the Section 338 tariffs would be included. For Canadian dairy processors, distillers, furniture makers and apparel exporters, that is the difference between a negotiation that matters to them and one that does not.
The structural reason for the narrow agenda is legal. The United States Supreme Court ruled on February 20, 2026, by a six to three majority, that the International Emergency Economic Powers Act does not authorize tariffs, striking down the fentanyl tariffs applied to Canada, Mexico and China along with the broader reciprocal tariff program. TD Economics noted that IEEPA tariffs had raised 133 billion dollars, roughly 60 percent of American tariff revenue in 2025, and that the Court did not resolve whether that money must be refunded. Section 232 and Section 301 survived the ruling intact. Section 338 emerged afterward as a replacement instrument, which is precisely why it is politically harder to unwind.
How the August round collapsed
Understanding what is achievable now requires understanding what was nearly achieved in August.
According to the Yahoo Finance Canada account, Canadian negotiators had secured three elements before the talks broke down: lower tariffs on steel shipments under a defined quota, a reduction in aluminum tariffs, and an agreement that provinces would return American alcohol to liquor store shelves. That last item, modest in dollar terms, had become a symbolic irritant in Washington after several provincial liquor boards pulled American products during earlier rounds of the dispute.
Autos were the sticking point, and remain so. The United States offered to cut its tariff on cars and light trucks from 25 percent to 15 percent. Canada wanted larger Canadian built trucks included in the relief, and the gap was not bridged. Industry officials cited by CBT News suggested that a broader North American content deduction, layered on top of a headline rate cut, could push the effective rate into single digits, which would be a materially different outcome for Ontario assembly plants than a flat 15 percent.
Talks collapsed on August 23, one day after the Section 338 tariffs took effect. Canada’s response came on September 8, when counter tariffs of 15, 25 or 50 percent were applied to 27.6 billion dollars of American imports. The Finance Canada list covers certain steel and dairy products, appliances, furniture, clothing and electronics.
The Canada Border Services Agency implemented the countermeasures through Customs Notice 26 23, the United States Surtax Order (2026), effective September 8. Importers must declare the surtax on the Commercial Accounting Declaration using code 26186A for 15 percent, 26186B for 25 percent or 26186C for 50 percent, with the amount entered in field 85. The surtax applies only to goods originating in the United States under CUSMA marking rules, and is not cumulative with the Steel Derivative Goods Surtax Order. The surtax itself cannot be appealed, although CBSA re determinations can be, with a review available under section 60 of the Customs Act within 90 days of payment.
Reporting the sequence this way matters because it establishes the shape of any deal. Canada’s countermeasures are tied to the American measures that provoked them. A Section 232 only settlement would leave Canada’s Section 338 response, and the American Section 338 tariffs themselves, in place.
The midterm variable
Democrats won control of both the Senate and the House in Tuesday’s elections, campaigning in part on rising costs that they attributed to tariffs, including those on Canada. Hakeem Jeffries is set to become the first Black Speaker of the House. Trump said the results would have been different if his name had been on the ballot.
Canadian officials moved quickly to dampen expectations that the result changes anything. Dominic LeBlanc, the minister responsible for Canada United States trade relations, told reporters on Wednesday that the midterm outcome “won’t significantly affect his government’s focus and work,” according to a Reuters report relayed by CBT News. LeBlanc said he planned to speak with Lutnick and Trade Representative Jamieson Greer in the coming days.
CTV News reported that political observers in Atlantic Canada expect the Democratic showing to deliver no immediate tariff relief for Canada, a view consistent with the institutional reality. Section 232 and Section 338 tariffs are executive instruments. A Congress controlled by the opposition can hold hearings, attach conditions to appropriations and attempt legislation, but it cannot by itself lift a national security tariff, and any statute doing so would face a veto.
Where the midterms plausibly matter is in incentives rather than mechanics. Tariffs became a live electoral issue in Michigan and Maine, both of which have substantial cross border exposure, and the administration now faces a two year run up to a presidential election with a hostile Congress and visible consumer price effects. Cox Automotive figures cited in the CBT News report put the cost of tariffs at roughly 30 billion dollars over about a year, with average manufacturer suggested retail prices up 10.4 percent. Consumers paid 5.9 percent more on average, and dealers absorbed 4.5 percent.
What the tariffs have cost Canada so far
The damage is concentrated and measurable.
TD Economics calculated that Canadian exports in Section 232 affected categories fell by roughly 15.5 billion dollars through 2025. Excluding oil, gold and Section 232 products, exports to the United States fell about 3.8 billion dollars, or roughly 1.4 percent year over year, a figure that suggests the damage has been sectorally targeted rather than economy wide.
Statistics Canada data released Wednesday sharpen the picture. Over the first nine months of 2026, Canadian exports of motor vehicles and parts fell 5.3 billion dollars, or 7.6 percent, to 64.9 billion dollars, the largest dollar decline among seven manufacturing heavy export categories. Forestry products and building materials fell 2.6 billion dollars, or 7.5 percent, to 32.2 billion dollars. Together those two sectors, both squarely inside the Section 232 perimeter, lost close to 8 billion dollars in export sales.
Dimitry Anastakis, a business historian at the University of Toronto quoted in Energi Media’s analysis of the trade data, said American tariffs have hurt Canadian vehicle producers, with auto exports to the United States near multi year lows. He argued that the 50 percent tariffs on steel and aluminum represent a larger problem for the auto sector overall than the vehicle tariff itself, because metal costs feed into every stage of assembly.
On lumber, the arithmetic shifted in Canada’s favour last month without any negotiation. The United States Department of Commerce cut the combined anti dumping and countervailing duty rate for most Canadian producers to 24.75 percent from 35.16 percent, with the Federal Register notice dated October 19, 2026. The dumping component fell to 10.64 percent from 20.53 percent and the subsidy component to 14.11 percent from 14.63 percent. Company specific dumping rates include 17 percent for Canfor, 4.71 percent for West Fraser and 13.13 percent for Resolute. Layering the 10 percent Section 232 lumber tariff on top produces a total import charge of 34.75 percent. That Section 232 layer is now inside the negotiating perimeter.
Where the parties stand
Ottawa’s public position is that it is negotiating from a position of patience rather than urgency. Carney has said Washington has dropped some of its earlier demands, without specifying which, and has declined to commit to a timeline. His caveat about whether Trump will honour an agreement reflects the August experience, in which a near complete package evaporated within days.
Washington’s position is harder to read because it is being advanced by the official Canadian negotiators hold responsible for the previous breakdown. The reported decision to route the revival through Lutnick rather than Greer, with Greer potentially rejoining if formal negotiations resume, suggests the American side is treating this as an exploratory phase rather than a resumption of the August text.
Industry positions are more consistent. Steel, aluminum, lumber and auto employers have pressed for Section 232 relief as the single highest priority, and the restarted agenda reflects that lobbying. The Canadian Federation of Independent Business has continued to press for broader support for small firms, and reporting on Budget 2027 consultations indicates small and medium enterprises are seeking a dedicated tariff shield.
Consumer facing sectors are the ones left outside. Households planning purchases of American made appliances and furniture continue to pay Canada’s own counter tariffs, which are built into shelf prices, and no rollback timeline has been published.
Economic impact analysis
A Section 232 only settlement would be worth a great deal to a narrow slice of the economy and very little to the rest of it.
The sectors inside the perimeter, steel, aluminum, softwood lumber and autos, together account for a disproportionate share of Canadian manufacturing employment and of the export decline recorded since 2025. Relief on metals in particular would propagate through the auto supply chain, which is the point Anastakis makes. A reduction in the vehicle tariff from 25 percent to 15 percent, combined with a workable North American content deduction, would restore competitiveness to Ontario assembly operations that currently ship into a 25 percent wall.
The sectors outside it would see nothing. Dairy, alcohol, electronics, clothing and furniture exporters facing 50 percent Section 338 duties would continue to face them, and Canada’s mirror countermeasures on 27.6 billion dollars of American goods would presumably remain as leverage.
The macro backdrop limits how much any deal can deliver. The Bank of Canada projects growth of roughly 1 percent in 2026 and 2 percent in each of 2027 and 2028. The Parliamentary Budget Officer estimates that trade measures could leave real gross domestic product about 1.4 percent lower after five years. Dan Ciuriak, a former Canadian trade official, has argued that tariffs cut into company profits and that firms will eventually reorganize supply chains to avoid them, but that the depth of North American production integration limits how fast that can happen.
Implications for importers and exporters
For Canadian businesses, the practical advice is to prepare for a partial deal rather than a comprehensive one.
Exporters in steel, aluminum, lumber and autos should model relief scenarios now, including a quota based steel arrangement of the kind reportedly agreed in August. Quota structures create first mover advantages and administrative obligations that flat rate reductions do not, and firms that have not mapped their shipment profiles against a hypothetical quota will be slow to use one.
Exporters outside the Section 232 perimeter should assume no change. Dairy, alcohol, furniture, electronics, wood products and clothing exporters should continue to plan against 50 percent Section 338 duties and should not defer mitigation steps, including market diversification and tariff engineering, on the expectation of imminent relief.
Importers should maintain full compliance discipline under the United States Surtax Order (2026). Relief routes remain available through the Akwesasne Residents Remission Order, the United States Surtax Remission Order (2025) and the broader remission framework, and Duties Relief and Duty Drawback may apply to surtax paid, subject to CUSMA criteria. Note that GST is charged on a value for tax that includes the surtax even where customs duties are remitted, a point that routinely produces under remittance errors.
All parties should watch the CUSMA review track. Trump said in June that he was not looking to renew the agreement. If renewal is not confirmed, the pact moves to annual reviews and expires in 2036. It remains in force for now, and its content rules are what make the non American content deduction on vehicles possible. Any Section 232 auto settlement will be built on CUSMA machinery, which means the review and the tariff negotiation are not separable files.
Finally, contracts signed during this window should include explicit tariff adjustment clauses with defined trigger events and allocation of refund rights. The unresolved question of IEEPA refunds, left open by the Supreme Court in February, is a reminder that duties paid are not always duties lost, and that the party entitled to a refund is determined by contract as much as by customs law.
What to watch
The near term markers are LeBlanc’s conversations with Lutnick and Greer, whether Greer formally rejoins, and whether autos move. Sources cited by CTV News said there has been some movement on the auto file over the past ten days but expect it to remain among the hardest issues.
Beyond that, the test is whether the agenda widens. A deal confined to Section 232 would be a sectoral settlement, valuable to metal and auto workers and largely invisible to everyone else. A deal that reaches Section 338 would be the end of the trade war. Nothing reported this week suggests the second is close.
The legal architecture behind the deal
Any settlement will be shaped by the instruments available to the American administration, and those instruments narrowed sharply in February.
Before the Supreme Court ruling, the bulk of American tariff revenue flowed from the International Emergency Economic Powers Act, which allowed country specific and reciprocal tariffs to be imposed quickly and without a formal investigation. The six to three decision on February 20, 2026 removed that authority. What remained were Section 232, which requires a Commerce Department national security investigation that can take months, and Section 301, which is currently applied only to China.
Two replacement authorities sit alongside them. Section 122 permits tariffs of up to 15 percent for 150 days to address balance of payments deficits or defend the dollar. Section 338 of the Tariff Act of 1930 permits duties of up to 50 percent against countries deemed to discriminate against American commerce, and it is the authority under which the August 22 tariffs on Canadian goods were imposed. Both can be deployed quickly, and both are exposed to legal challenge in a way that Section 232 and Section 301 have generally not been.
This architecture explains the negotiating asymmetry. Section 232 tariffs are durable but adjustable through the proclamation process, which makes them tradeable in a negotiation. Section 338 tariffs are faster to impose but legally untested, which gives the administration reason to keep them in place while litigation risk is unresolved rather than bargaining them away. Canadian negotiators are therefore being offered the piece Washington can most comfortably concede.
The refund question compounds the uncertainty. The Supreme Court did not rule on whether the 133 billion dollars collected under IEEPA must be returned, and further litigation is expected. Canadian exporters and American importers who paid those duties have a contingent claim whose value and ownership depend on the terms of the contracts under which the goods moved.
A two track year for Canadian trade policy
The Lutnick opening is one of two significant files that moved this week. On November 4, International Trade Minister Maninder Sidhu announced in Beijing that Canada and China had extended favourable market access for Canadian canola meal, peas, lobster and crab to the end of 2028, with Canada extending remission on certain Chinese steel and aluminum products in return.
The juxtaposition is not accidental. Ottawa has pursued diversification as insurance against American unpredictability, and Global Affairs Canada reports Canadian exports to China grew 31.4 percent in the first half of 2026 to 21.5 billion dollars. Carney is expected in Shenzhen later this month for the Asia Pacific Economic Cooperation summit. Canada has also engaged with a European Union proposal for a form of associate membership, which Carney described as a bid for a unique alliance rather than conventional membership.
The limits of that strategy are visible in the same data. Statistics Canada reported Wednesday that exports to non American destinations fell 1.1 percent in September, a second consecutive monthly decline, and that more than 70 percent of Canadian goods exports still go to the United States. Diversification is proceeding, but not fast enough to make a Washington settlement optional.