U.S.-Canada Deal to Reportedly Cut Auto Tariffs to 15%

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M

Update

August 20, 2026 01:06 PM GMT

Autos & Shared Mobility | North America

Morgan Stanley & Co. LLC

Andrew S Percoco

Equity Analyst

U.S.-Canada Deal to Reportedly

Cut Auto Tariffs to 15%

What Happened?: According to Bloomberg (here), the tentative trade deal between

Canada and the U.S., following President Trump’s three-day pause of the Section

Daniela M Haigian

Equity Analyst

Javier Martinez de Olcoz Cerdan

Equity Analyst

Morgan Stanley & Co. International plc+

the US to 15% (down from 25%). Importantly, the tariff would continue to apply

Shaqeal A Kirunda

value of the vehicle. The potential deal also would cut Section 232 tariffs on

Canadian steel and aluminum to 25% from 50%.

This would be as an incremental positive for the D3. Stellantis (covered by Javier

Ariana Salvatore

Equity Strategist

Jahvonte G Bain

Research Associate

F-Series Super Duty production in Oakville. Note that Ford does have additional

exposure to Canada through its Windsor Engine assembly plant, although it appears

that these components enter the US tariff-free under USMCA.

Katherine A Bennorth

Research Associate

Morgan Stanley & Co. International plc+

Matias Rodriguez Florez-Estrada

Research Associate

Exhibit 1:

Morgan Stanley & Co. LLC

11% of US LV sales in the US), followed by GM (~2%), while Ford has near-zero

Escape. However, its exposure to Canada vehicle assembly will increase as it ramps

Equity Analyst

Martinez de Olcoz Cerdan) has the greatest Canadian finished-vehicle exposure (10Canadian vehicle assembly exposure following the wind-down of the Corsair and

Morgan Stanley Europe S.E., Madrid Branch+

338 tariffs, will reportedly include a tariff reduction on Canadian auto exports into

only to the non-U.S. content of USMCA-compliant vehicles, rather than the full

US Sales by OEM - Split by Region of Production

Autos & Shared Mobility

North America

Industry View

Source: S&P Global, Morgan Stanley Research

More importantly, we view this potential agreement with Canada as a possible

read-through to Mexico. Mexico represents a substantially larger share of D3

…