Canada’s former top trade negotiator expressed doubts on Monday about Ottawa striking a tariff agreement with Washington before the U.S. midterm elections. Steve Verheul, speaking to an online business audience, mentioned a potential opportunity for a deal before the fall elections if President Donald Trump and his administration seek a political victory. However, Verheul indicated that it is more probable for discussions to extend beyond the midterms and possibly into the following year.
Verheul, who led Canada’s negotiations during the NAFTA renegotiation in Trump’s first term, is now a principal at the public affairs agency GT & Co. He made these remarks at a Bank of Montreal event for clients focusing on the trade landscape leading up to July 1, when the review of the Canada-U.S.-Mexico Agreement (CUSMA) officially begins.
While Canada and Mexico have shown interest in extending CUSMA beyond 2036 for another 16 years, the U.S. may opt for rolling annual reviews. Trump retains the option to exit the agreement with a six-month notice period.
Prime Minister Mark Carney acknowledged that President Trump is not a big supporter of CUSMA but emphasized ongoing efforts by Canada to collaborate with the U.S. in specific sectors. BMO’s chief economist, Doug Porter, expressed a low likelihood of the U.S. abandoning the agreement.
Porter noted minimal economic growth due to U.S. tariffs impacting Canadian exports but stopped short of labeling the situation as a recession. BMO’s forecast anticipates sluggish growth in 2026, with a potential rebound in 2027, assuming the U.S. tariff policy remains mostly unchanged.
Verheul highlighted the substantial U.S. support from various sectors for renewing CUSMA, indicating its importance in shielding Canadian exports from tariffs. He emphasized the need to address steep U.S. sectoral tariffs on key Canadian exports like steel, aluminum, and automobiles.
Verheul questioned the value of tariff agreements made by other countries with Trump, suggesting they may not endure due to their perceived lack of solidity and long-term viability.
