By David Ljunggren
OTTAWA (Reuters) - Canada does not hold out much hope that Washington will quickly lift tariffs that it imposed on steel and aluminium exports and is resisting a U.S. push to agree to strict quotas, two sources familiar with the matter said.
The administration of U.S. President Donald Trump imposed the tariffs on Canada and Mexico in June, citing national security reasons. Although Canada and Mexico agreed a renewed continental trade deal last week, the measures remain in place.
The government of Canadian Prime Minister Justin Trudeau is pessimistic about the chances of the tariffs being removed soon, said the sources, who asked to remain anonymous, given the sensitivity of the situation.
In March, the United States signed a deal with Seoul whereby in exchange for an end to steel tariffs, South Korea agreed to cut exports by 30 percent of the past three years' average.
During talks on the new United States-Mexico-Canada Agreement (USMCA), U.S. officials told Canada they wanted a similar arrangement for steel and aluminium, one source said, declining to give specific details.
Canada rejected the demand and made clear any cap on the metals would have be at a level higher than current exports to allow room for shipments to grow.
The source noted the USMCA stipulates that if Washington imposes autos tariffs on national security grounds, Canada would get a tariff-free passenger vehicle quota of 2.6 million units. This is well above current export levels.
Canada is the single largest supplier of both aluminium and steel to the United States.
Two other sources directly familiar with the talks said the export limit the United States sought on aluminium would have caused investment in the industry to plunge.
"It was so unacceptable that the discussions just ended before they began," said one source.
The second source said the "government's position was that they would rather fight this in court than accept a hard cap."
Trudeau, who tried and failed to have the punitive measures removed before the USMCA negotiations ended on Sept 30, said last week he was pressing Washington hard to remove the tariffs. The United States, Mexico and Canada are due to sign the USMCA at the end of November.
The office of Canadian Foreign Minister Chrystia Freeland, who is charge of relations with the United States, did not immediately respond to a request for comment.
(Reporting by David Ljunggren; Editing by Bernadette Baum)
