The prospective trade deal being negotiated by Ottawa and Washington would introduce a quota system for Canadian steel exports with a 25-per-cent tariff on metal shipments inside the quota and a 50-per-cent tariff on exports above the quota, according to three sources with knowledge of the negotiations.

According to a steel industry executive, Ottawa has agreed to a tariff-rate-quota system for steel that would allow 4-million tonnes a year of steel to be shipped to the U.S. at a lower 25-per-cent tariff rate. After the first 4-million tonnes, steel exports will still be subject to a 50-per-cent tariff – which is the current duty Canadian steel exporters face under the Trump administration’s Section 232 sectoral tariffs.

Two other industry sources confirmed that Ottawa and Washington had agreed to a 25-per-cent tariff inside the quota. The steel executive added that Canada has agreed to remove all of its own counter-tariffs on U.S. steel, and further restrict imports of steel from third countries.

The Globe and Mail is not naming the sources as they were not authorized to publicly discuss the negotiations.

Canada is also negotiating the terms of aluminum trade, with the aim of reducing tariffs.