Canada’s former chief trade negotiator expects that a tariff agreement with Washington won’t be finalized before the U.S. midterm elections. Steve Verheul mentioned that there might be an opportunity for a deal as U.S. President Donald Trump seeks a political victory before the fall elections. However, Verheul suggested that it is more probable for discussions to extend beyond the midterms and possibly into the following year.
Verheul, who led Canada in trade discussions during the renegotiation of the North American free trade pact under Trump’s initial term, now works as a principal at the public affairs agency GT & Co. He shared his insights at a Bank of Montreal event for clients focusing on the trade perspective leading up to July 1, when the review of the Canada-U.S.-Mexico Agreement (CUSMA) formally commences.
While Canada and Mexico have indicated their desire to extend CUSMA beyond 2036 for another 16 years, the U.S. could opt for rolling annual reviews. Trump retains the option to exit the agreement with a six-month notice period. Prime Minister Mark Carney acknowledged Trump’s lack of enthusiasm for CUSMA but emphasized ongoing efforts to collaborate in specific sectors.
BMO’s chief economist, Doug Porter, expressed a low likelihood of the U.S. terminating the agreement. Despite minimal economic growth over the past year due to U.S. tariffs impacting Canadian exports, Porter does not foresee Canada entering a recession. BMO’s economic forecast anticipates a challenging year in 2026 with potential growth in 2027, assuming the U.S. maintains its current tariff stance.
Verheul noted broad support in the U.S. for renewing CUSMA among the public, businesses, senators, and members of Congress. He highlighted that CUSMA continues to shield most Canadian exports from U.S. tariffs, indicating the U.S.’s recognition of the agreement’s value.
The focus for Canada remains on addressing substantial U.S. sectoral tariffs on steel, aluminum, autos, and other commodities. Verheul expressed skepticism about the adequacy of the current offers on the table for Canada and questioned the sustainability of tariff agreements made by other countries with the Trump administration.
