The steep U.S. tariffs on steel and aluminum imposed last year on national security grounds have become a major stumbling block to ratifying a new North American trade pact the three countries negotiated last year.
The reason Canada is being included at this stage is to avoid a repeat of NAFTA talks when Mexico reached a deal with the USA and Canada wasn't included.
"Mexico is close to a deal with the United States to lift tariffs on steel on aluminum without imposing any quotas on exports, but the country has paused to give Canada an opportunity to work on its own deal with Washington, the chief Mexican negotiator told The Globe and Mail".
U.S. Trade Representative Robert Lighthizer was scheduled to meet with Canadian Foreign Minister Chrystia Freeland in Washington later on Wednesday to discuss the metals tariffs and other issues related to the U.S. -Mexico Canada Agreement.
U.S. President Donald Trump has denied that trade talks with China had broken down even as he imposed more tariffs on Chinese imports and both sides prepared for another round of further tariffs, roiling global markets in recent days.
In his testimony before a Senate committee, Mr Mnuchin said: "I think we are close to an understanding with Mexico and Canada". However, he did not provide any details.
Freeland's comments were the strongest yet linking the tariffs with the delay in ratifying the US-Mexico-Canada Agreement (USMCA). None of the three countries' legislatures have ratified USMCA.
A bill to ratify the deal would have to be approved by Canada's House of Commons, which adjourns for the summer on June 21 ahead of an October general election.
Lighthizer later met with U.S. House of Representatives Speaker Nancy Pelosi to discuss the path forward on a potential USMCA vote.
Mexican Economy Minister Graciela Marquez on Tuesday said Mexico was "close to negotiating the lifting of tariffs".
With Mr Lighthizer, Mr Mnuchin has led the U.S. delegation in 11 rounds of shuttle diplomacy aimed at resolving the trade dispute between the world's two biggest economies.
In a sign of thawing tension, Mexico's Seade said it was not the right time to target new products. "It's not necessary because I think the top priority is to get a deal first".