Canada’s former top trade negotiator mentioned on Monday that he does not anticipate Ottawa and Washington finalizing a tariff agreement before the upcoming U.S. midterm elections. Steve Verheul informed an online business audience that there might be an opportunity for a deal when President Donald Trump and his team seek a political victory before the fall elections. However, Verheul suggested that it is more probable for discussions to extend past the midterms and potentially into the following year.
Having led negotiations for Canada during the renegotiation of the North American free trade pact in Trump’s first term, Verheul, now principal at GT & Co., shared his insights at a Bank of Montreal event discussing the trade landscape prior to the formal initiation of the Canada-U.S.-Mexico Agreement (CUSMA) review on July 1. While Canada and Mexico have indicated interest in extending CUSMA beyond 2036 for an additional 16 years, the U.S. may opt for continuous annual reviews of the deal. Trump retains the ability to exit the agreement with a six-month notice period.
Prime Minister Mark Carney acknowledged earlier in the month that President Trump is not a strong supporter of CUSMA. Nonetheless, Carney emphasized ongoing efforts by Canada to collaborate with the U.S. administration in specific sectors. BMO’s chief economist, Doug Porter, expressed a minimal likelihood of the U.S. scrapping the agreement and noted the stagnant economic growth over the past year due to U.S. tariffs impacting Canadian exports. Despite this, Porter did not classify Canada as being in a recession. BMO’s economic forecast suggests limited growth for Canada in 2026, projecting a rebound in 2027 under the assumption of consistent U.S. tariff policies.
Although Trump has hinted at the possibility of withdrawing from CUSMA, Verheul highlighted the broad support in the U.S. for renewing the trade pact from various sectors. He also pointed out that CUSMA continues to shield most Canadian exports from U.S. tariffs, indicating the value that the U.S. sees in maintaining the agreement. Verheul stressed the importance for Canada to address significant U.S. tariffs on specific sectors like steel, aluminum, autos, and other commodities. He expressed skepticism regarding the adequacy of the tariff agreements struck by other countries with the U.S., citing concerns about their durability over time.
