Canada’s former top trade negotiator expressed doubts on Monday about the likelihood of Ottawa reaching a tariff agreement with Washington before the U.S. midterm elections. Steve Verheul, who led Canada’s negotiations during the North American free trade pact renegotiation in Trump’s first term, mentioned that there might be a chance for a deal if the U.S. administration 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.
During an event for Bank of Montreal clients discussing the trade outlook leading up to July 1, when the review of the Canada-U.S.-Mexico Agreement (CUSMA) formally starts, Verheul highlighted that while Canada and Mexico favor renewing CUSMA for another 16-year term beyond 2036, the U.S. might opt for rolling annual reviews or could trigger an exit clause with six months’ notice.
Despite Trump’s skepticism towards CUSMA, Prime Minister Mark Carney emphasized ongoing efforts 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 but noted the economic challenges posed by stagnant growth due to U.S. tariffs impacting Canadian exports.
Verheul emphasized the importance for Canada to address high U.S. sectoral tariffs on steel, aluminum, autos, and other commodities. He raised concerns about the sustainability of tariff agreements other countries have made with Trump, suggesting they may not endure long term due to their shaky foundations. Nonetheless, Verheul pointed out that CUSMA still provides protection for most Canadian exports from U.S. tariffs, indicating the ongoing value the U.S. sees in maintaining the agreement.
In conclusion, while uncertainties remain regarding the fate of CUSMA amid evolving trade dynamics, Verheul’s insights shed light on the complex negotiations and challenges facing Canada in its trade relations with the U.S.
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