OTTAWA (Reuters) - Canada is willing to reduce its retaliation to U.S. tariffs if the Trump administration drops some of the tariffs it has imposed, a Canadian government source said on Wednesday.

Negotiations between Ottawa and Washington were continuing, and no deal had yet been reached, the source, who spoke on the condition of anonymity, cautioned.

U.S. President Donald Trump will exempt automakers from his punishing 25% tariffs on Canada and Mexico for one month as long as they comply with existing free trade rules, the White House said on Wednesday.