Former head of trade negotiations for Canada, Steve Verheul, predicts that a tariff agreement between Ottawa and Washington is unlikely to be reached before the U.S. midterm elections. Speaking to a virtual business audience, Verheul mentioned a potential opportunity for a deal before the elections if President Donald Trump seeks a political victory. However, he believes 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 revision in Trump’s first term and currently works at GT & Co., shared his insights at a Bank of Montreal event discussing the trade landscape leading up to July 1, the official start of the Canada-U.S.-Mexico Agreement review.
While Canada and Mexico desire a CUSMA extension until 2036, the U.S. may opt for rolling annual reviews. Trump retains the ability to exit the agreement with a six-month notice period, a possibility acknowledged by Prime Minister Mark Carney. Despite Trump’s reservations about CUSMA, Carney emphasized ongoing efforts to collaborate with the U.S. in specific sectors.
BMO’s chief economist, Doug Porter, expressed skepticism about the U.S. terminating the agreement and highlighted the impact of stagnant economic growth due to U.S. tariffs on Canadian exports. Porter’s forecast suggests a challenging economic outlook for 2026, with a potential rebound in 2027 if U.S. tariff policies remain unchanged.
Verheul noted strong support within the U.S. for CUSMA renewal among various stakeholders, highlighting its significance in shielding Canadian exports from U.S. tariffs. He emphasized the need to address sector-specific U.S. tariffs on Canadian products like steel, aluminum, and automobiles, pointing out the lack of substantial tariff agreements with other countries under the Trump administration.
In conclusion, Verheul expressed skepticism about the current tariff agreements’ sustainability and emphasized the importance of securing a favorable deal for Canada moving forward.