The United States has agreed to remove steel and aluminum tariffs on Canada in what was a key roadblock to a new trade deal and a sore point in relations.
Canada, in turn, has agreed to scrap the tariffs it imposed in retaliation.
In a joint statement on Friday, the two countries said they have agreed to eliminate the tariffs within 48 hours.
Sources in the U.S. and Canada said the Trump administration also has reached a deal to remove steel and aluminum tariffs from Mexico.
President Donald Trump last year slapped tariffs on imported steel and aluminum from China and a number of other nations, including Canada, invoking a rarely used provision of a 1962 law to claim that the foreign metals posed a threat to U.S. national security.
The administration retained the tariffs on Canada and Mexico even after the two countries agreed to Trump's demands to overhaul the North American Free Trade Agreement, which went into effect in 1994. Removal of those tariffs on Canada has become a key demand for the administration to win support of the reworked trade agreement.