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Canada-US Trade Deal Still Possible by Year-End Amid Tariff Tensions, Commerzbank Says

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A Canada-US trade deal could still be reached by year-end despite renewed tariff tensions, Commerzbank Research said in a Tuesday note.

Monday's US tariffs on Canadian vehicles, auto parts and steel are set to come in force at the start of next year.

The new US tariffs were announced well in advance, leaving room for further negotiations before they take effect, wrote Commerzbank FX Analyst Michael Pfister.

US President Trump announced a "fairly moderate" response by his standards with Monday's new tariffs after trade talks with Canada broke late Friday, added Pfister.

The United States may also be recognizing the importance of Canadian supplies, according to Commerzbank. Trump on Monday emphasized the country's reliance on Canadian aluminum imports, highlighting the potential economic costs of prolonged trade restrictions.

"So perhaps an agreement can still be reached by the end of the year," said the bank's analyst.

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