Carney and Trump Signal Trade Deal Progress Ahead of US Midterms

Key points

• Carney confirmed a 'good conversation' with Trump, noting that recent discussions have outlined a deal that respects Canadian sovereignty and language rights.
• Trump stated that the potential agreement includes reviving the Keystone XL pipeline, with Canada paying for the route, and eliminating tariffs on US farmers.
• The trade dispute involves approximately $20 billion in mutual tariffs, including US levies on Canadian motorcycles, dairy, and alcohol.
• Canadian opposition leader Pierre Poilievre criticized Carney for not reaching a deal sooner, arguing that auto workers and small businesses cannot afford to wait until 2029.
• The US midterm elections on November 3 are influencing the pace of negotiations, particularly in border states like Michigan and Maine where tariffs are a key issue.

Background

The current diplomatic thaw follows a breakdown in August 2026, when negotiations collapsed over US demands regarding Canadian auto, steel, and aluminum sectors, as well as restrictions on Canadian trade with third parties. In the interim, Canada has pursued diversification, signing a record trade deal with the UAE and deepening ties with the European Union, including a new 'Alliance for the Future' framework. Carney previously indicated he was willing to wait for a new US administration in 2029 rather than accept a poor deal, but recent weeks have seen increased engagement between US Trade Representative Jamieson Greer and Canadian officials.

How outlets are covering it

While all sources confirm the phone call and the intent to negotiate, they differ on the certainty of an outcome. POLITICO and AP News emphasize Trump's optimistic claims that a deal is 'very close' and includes specific terms like the Keystone XL pipeline. CBC News offers a more cautious view, noting that the form of the talks is unclear and that key elements remain unresolved, with sources suggesting an agreement is not imminent. Al Jazeera highlights the broader context of Canada's trade diversification efforts. On the Canadian side, opposition leader Pierre Poilievre argues that the delay is harmful to the economy, while Carney maintains that Canada is not in a rush and will only accept a deal that benefits its workers and sovereignty. US officials, including Commerce Secretary Howard Lutnick, have engaged in regular contact with Canadian counterparts, but formal negotiations have not yet resumed.

Why it matters

The outcome of these negotiations will determine the future of North American trade relations and could significantly impact the US midterm elections, particularly in border states where tariffs have become a contentious issue. A successful deal could ease economic pressures on both nations, while a failure could lead to prolonged trade tensions and further diversification of Canadian trade partnerships away from the US.

What to watch

Negotiating teams from both countries are expected to work on the details of a potential agreement in the coming weeks. The US midterm elections on November 3 may influence the urgency of the talks, as political pressure mounts in border states. The fate of the Keystone XL pipeline and the resolution of tariffs on autos, steel, and dairy will be key indicators of progress. Canada may continue to pursue trade diversification through the EU and other partners if the US deal does not materialize.