Canada weighs effects of midterms on trade deal with U.S.

Tractor-trailers and vehicles cross the Peace Bridge at the Canada-U.S. border in Fort Erie, Ontario. (Cole Burston/Bloomberg)

Donald Trump was rebuked by tariff-weary voters in midterm elections, but one of the U.S. president’s main targets — Canada — still faces a dilemma about what to do next.

The trade war became a problem for Republicans in northern battleground states and ultimately became one of a number of Trump policies, alongside the Iran war, that voters blamed for making their lives less affordable.

Late in the election campaign, Trump said several times that he expected to have a deal with Canada soon to reduce trade frictions. He even changed some of his tariffs against Canadian goods to help Maine Sen. Susan Collins with her re-election bid. And the Republican candidate for a Senate seat in Michigan, Mike Rogers, publicly came out against the White House’s trade policy against Canada. But Collins and Rogers both went down to defeat anyway.

With Democrats set to take control of the House and Senate, Trump’s ability to pass laws and appointments will be constrained. But he can continue to sidestep Congress and issue executive orders mandating tariffs and product bans — exactly as he has done so far in his second term. 

“Republicans were already under pressure to settle with Canada, and that pressure just got stronger,” said Brian Clow, who advised former Prime Minister Justin Trudeau on U.S. trade.

But the election outcome leaves Prime Minister Mark Carney with a tough call, he added. “Does Ottawa take a deal now that eases the pain but locks in some tariffs? Or bet on a Democratic Congress to rein Trump in?”

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Canada and the U.S. have one of the world’s largest bilateral economic relationships, exchanging nearly $900 billion of goods and services last year. That trade has been disrupted by tariffs but is still robust. Cross-border flows of goods between the countries were up almost 5% in the first nine months of this year compared with the same period in 2025, according to new data from the U.S. Commerce Department.  

Still, several Canadian industries, including autos, steel and lumber, are suffering badly under Trump’s tariffs because of the integrated nature of their supply chains. In addition, the White House has targeted some other Canadian products with 50% duties or import bans, and Canada has retaliated with counter-tariffs. 

In the days before the midterms, Carney sounded more optimistic about the prospect of a trade detente, telling reporters Nov. 3 the U.S. is “asking less” and “offering more” in negotiations. Previous stumbling blocks, such as Canada’s ability to protect the French language and strike its own agreements with other countries, have been removed, he said. 

But the two leaders also appeared to be close to a deal in August before talks collapsed into recriminations and more tariffs. And Carney hasn’t said anything to suggest the U.S. and Canada have resolved more difficult issues, including the duties that are harming the competitiveness of the Canadian steel and auto industries. 

Good conversation with President @realDonaldTrump on the future of Canada-U.S. trade. This builds on our recent constructive discussions on the outlines of a mutually beneficial trade deal that would create jobs for our workers, boost affordability for families, and fully respect Canada’s languages, culture, and sovereignty. Our teams will now be working in the coming weeks to deliver that outcome.

— Mark Carney (@MarkJCarney) November 1, 2026

There’s some economic pressure on Carney to sign a deal for partial relief in those sectors — but it would be at the cost of assenting to tariffs that Canada has called illegal under the U.S.-Mexico-Canada Agreement.

“Canadian workers in auto, steel and lumber are paying for this trade war right now,” Clow said. “If Ottawa holds out and Trump doesn’t move, more of them will lose their jobs. Waiting is also a bet on Trump himself. Does he hear the message from this result or double down on tariffs? Powerful U.S. industries, like steel, still want some tariffs to stay.”

Asked in August if Democrats would reverse Trump’s tariffs, California Gov. Gavin Newsom, a possible 2028 presidential candidate, told a Canadian television network that he “can’t guarantee that.” Some trade disputes, like U.S. complaints about Canadian softwood lumber, have continued under both parties.

House Minority Leader Hakeem Jeffries on Wednesday promised the Democrats would pass a bill to “stop the stupid Trump tariffs jacking up prices on Americans.” But Trump has the power to veto such legislation, and the House and Senate would need two-thirds majorities to override it. 

As for the president and his officials, “I don’t think they’re prepared to concede too much on the core issue, which is going to be about autos and steel,” said Barry Appleton, co-director of the New York Law School Center for International Law, who has advised governments including Canada’s most populous province, Ontario, on trade issues.

The election results were celebrated by some Canadian provincial politicians, but Carney’s top Cabinet minister on trade was cautious. 

“It’s not particularly constructive for Canadians to interpret results in a foreign country’s election,” said Dominic LeBlanc, the minister responsible for Canada-U.S. trade. Trade talks “are conducted at the level of the American executive, with the Cabinet secretaries that President Trump has in his government, and they remain in office today.”

And it’s far from certain how the president will respond to his party’s defeat. 

“Does he blame Canada, at least partially? Does he see a deal as part of his legacy, because he is now in legacy mode as a lame-duck president? Frankly, it could go either way,” said Fen Hampson, a professor of international affairs at Carleton University in Ottawa. 

“But we should not expect tariffs to disappear. The question is how much will they go down and will it be enough to keep our key industries alive or, at the very least, on life support.”

Written by Brian Platt, Thomas Seal and Derek Decloet