Canada Weighs Trade Deal Timing After Democrats Sweep Midterms

U.S.-Canada goods and services trade hit nearly $900 billion last year, yet the path forward for Prime Minister Mark Carney now runs through a political fork: cut a deal with President Donald Trump that locks in some tariffs, or wait for a Democratic Congress to rein him in.

Voters rebuked Trump's trade policies in the midterms, handing Democrats control of both the House and Senate. But the election result constrains legislation, not executive orders. Trump can still sidestep Congress and mandate tariffs and product bans by decree, exactly as he has throughout 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 outcome leaves 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?"

Is cross-border trade actually collapsing?

Not yet. Commerce Department data shows goods flows between the two countries rose almost 5% in the first nine months of this year versus the same period in 2025. Trade has been disrupted by tariffs but remains robust.

The damage is concentrated in specific sectors. Canadian autos, steel and lumber are suffering badly because of integrated supply chains. The White House has also hit some Canadian products with 50% duties or import bans, and Ottawa has retaliated with counter-tariffs.

That sectoral pain creates pressure on Carney to sign for partial relief. The cost: Canada would assent to tariffs it 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."

How close is a deal?

Closer than in August, when talks collapsed into recriminations and more tariffs. On Nov. 3, Carney told reporters the U.S. is "asking less" and "offering more" in negotiations, and said previous stumbling blocks — Canada's ability to protect the French language and strike its own agreements with other countries — have been removed.

On Nov. 1, Carney posted on X that he had a "good conversation" with Trump 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."

But Carney has not signaled resolution of the harder issues, notably the duties damaging Canadian steel and auto competitiveness. "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 Applepton... Barry Appleton, co-director of the New York Law School Center for International Law, who has advised Ontario on trade.

Can a Democratic Congress actually undo tariffs?

Not easily. House Minority Leader Hakeem Jeffries promised Wednesday that Democrats would pass a bill to "stop the stupid Trump tariffs jacking up prices on Americans." But Trump holds a veto, and overriding it requires two-thirds majorities in both chambers.

Asked in August whether Democrats would reverse the tariffs, California Gov. Gavin Newsom, a possible 2028 presidential candidate, told a Canadian television network he "can't guarantee that." Some disputes, such as U.S. complaints about Canadian softwood lumber, have persisted under both parties.

Canada's own Cabinet is damping expectations. "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. 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."

What does Trump do next?

Nobody knows. "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."

For shippers and forwarders moving autos, steel and lumber across the border, that means planning for a partial tariff reduction at best — with negotiating teams due to work the outlines of a deal in the coming weeks.