Canada’s ex-chief trade negotiator predicted on Monday that a tariff agreement with Washington is unlikely before the U.S. midterm elections. Steve Verheul suggested that there may be a chance for a deal if President Donald Trump seeks a political victory before the fall elections. However, he believes it is more probable that negotiations will extend beyond the midterms and possibly into the following year.
Verheul, who led Canada’s talks during the renegotiation of the North American free trade agreement under Trump, shared his insights at an event for Bank of Montreal clients discussing the trade landscape before the formal start of the Canada-U.S.-Mexico Agreement review on July 1.
While Canada and Mexico have expressed interest in extending CUSMA beyond 2036, the U.S. could opt for rolling annual reviews or trigger an exit clause with a six-month notice period. Prime Minister Mark Carney acknowledged Trump’s skepticism towards CUSMA but emphasized ongoing efforts to collaborate in specific sectors.
BMO’s chief economist, Doug Porter, expressed doubt about the U.S. scrapping the agreement despite stagnant economic growth due to tariffs impacting Canadian exports. Porter’s forecast suggests a challenging 2026 for the Canadian economy, assuming the U.S. tariff stance remains unchanged.
Verheul highlighted broad support within the U.S. for renewing CUSMA, indicating its importance in shielding Canadian exports from tariffs. He emphasized the need to address significant U.S. sectoral tariffs on various commodities such as steel, aluminum, and autos. Verheul also questioned the durability of tariff deals made by other countries with Trump, suggesting they may not withstand the test of time.
Overall, while negotiations continue, the future of CUSMA remains uncertain, with key issues such as sectoral tariffs and the longevity of the agreement at the forefront of discussions.