Canada's finance and trade ministers held a 7 1/2-hour meeting with their American counterparts yesterday, and said the Canadian cabinet would decide today whether to resume free trade talks with the United States.

"We made a lot of progress. We went over a lot of ground," said Trade Minister Pat Carney as she left the Treasury Department to fly back to Ottawa. She added that she and Finance Minister Michael Wilson, who remained here for the rest of the IMF-World Bank meetings this week, would make a recommendation to the government of Prime Minister Brian Mulroney, but she declined to say what it would be.

The two ministers and Mulroney's chief of staff, Derek Burney, held an extraordinary meeting that stretched from 1:30 p.m. until 9 p.m. with Treasury Secretary James A. Baker III, U.S. Trade Representative Clayton K. Yeutter and Deputy Treasury Secretary Peter McPherson.

After the Canadian officials left, Baker and Yeutter said they had "a thorough discussion of all the elements involved in the negotiations," which are running against a congressional deadline of midnight Sunday.

"We are hopeful that this will provide a basis for the negotiations to resume and the United States remains prepared to resume negotiations at any time."

Canada walked out of the talks here Wednesday, declaring that the Reagan administration was refusing to address its main goal -- the creation of a binding, bilateral tribunal to settle trade disputes.

A free trade agreement has been the cornerstone of Mulroney's economic program since he first proposed it to Reagan 2 1/2 years ago. But Canadian officials have complained that the Reagan administration had downplayed the talks by assigning them to a negotiator in Yeutter's office and had not given them the top-ranking political support that they deserved.