Canada’s former chief trade negotiator indicated on Monday that a tariff agreement between Ottawa and Washington is unlikely to be reached before the U.S. midterm elections. Steve Verheul, who led Canada’s talks during the renegotiation of the North American free trade pact under Trump, expressed that there might be an opportunity for a deal if Trump seeks a political victory before the fall elections. However, he suggested that discussions may extend beyond the midterms and possibly into the next year.
While both Canada and Mexico have expressed interest in renewing the Canada-U.S.-Mexico Agreement (CUSMA) beyond 2036, the U.S. could opt for rolling annual reviews instead. Trump retains the option to exit the agreement with a six-month notice. Despite Trump’s reservations about CUSMA, Prime Minister Mark Carney emphasized ongoing efforts to collaborate with the U.S. in specific sectors.
BMO’s chief economist, Doug Porter, considers it unlikely that the U.S. will terminate the agreement. He acknowledged the impact of U.S. tariffs on Canadian exports, which has hindered economic growth but stopped short of labeling it a recession. BMO’s forecast predicts minimal economic growth in 2026, contingent on the U.S. maintaining its current tariff approach.
Verheul highlighted the importance for Canada to address U.S. sectoral tariffs on steel, aluminum, autos, and other commodities. He expressed skepticism about the quality of tariff agreements other countries have struck with Trump, suggesting that they may not endure due to their lack of solidity. Despite potential challenges, there is substantial support within the U.S. for renewing CUSMA, indicating its perceived value by American stakeholders.
