MediumI Geo-Economics & Chokepoints3 November 2026, Tuesday
Canada reopens the tariff talks with Washington that collapsed in August
In August the United States imposed a 50% tariff on roughly 20 billion dollars of Canadian goods. On 1 November Trump said the two sides had agreed on a draft deal; on 3 November Carney said Washington was now asking for less and offering more, but that no text was ready.
According to AP on 1 November, Trump said the two countries were very close to a deal and linked the talks to the Keystone XL pipeline and to removing tariffs paid by US farmers. Carney wrote the same day that negotiating teams would work to reach an outcome in the coming weeks; his 1 November statement set no timetable. It came 2 days before the US midterm elections on 3 November and contained no tariff rate.
According to The Globe and Mail, Carney said on 3 November at the Commonwealth summit in Antigua and Barbuda that the United States had backed away from 2 key demands. One was to treat French-language protection rules as a trade barrier; the other was to limit Ottawa's power to sign agreements with third countries. Canada is seeking tariff relief in 4 sectors: steel, aluminium, cars and lumber.
The real constraint lies in the 4 sectoral tariffs. In August Washington refused to extend an exemption for medium and heavy trucks, which Carney said threatened the plants of 2 major carmakers in Ontario, GM and Ford. The labour force survey released on 6 November showed wholesale and retail trade shedding 29,000 jobs, reinforcing the view that tariff uncertainty has frozen hiring.
Talay assessment
Bottom line
Reopening the talks before the election marks a change of direction, but the binding constraint, the tariffs on steel, cars and trucks, remains in place. Washington's retreat on 2 political demands raises the odds of a deal. The most likely path is partial tariff relief by year-end, with heavy industry items such as trucks left until last.
Likely effects
- Canadian manufacturingNegative1–6 months
Without relief on car and truck tariffs, GM and Ford plants in Ontario will keep planning production under uncertainty.
- Canadian employmentPositive1–6 months
A clear deal would ease the tariff-driven hiring freeze behind losses such as the 29,000 jobs shed in wholesale and retail.
- North American energy tradeUncertain6 months+
Bringing Keystone XL into the talks shows tariffs could be traded for concessions on energy infrastructure.
Possibilities, ranked
- 1Partial deal by year-end50%
Relief arrives for steel and aluminium, while car and truck tariffs are left for a later round.
Watch: A joint White House or Ottawa statement that includes tariff rates
- 2Talks drag on, tariffs stay35%
The remaining major issues prove intractable and the 50% tariff carries into 2027.
Watch: Carney's announcement of the next negotiating round
- 3Comprehensive deal15%
A broad package is signed covering relief in all 4 sectors and including Keystone XL.
Watch: A deal text that includes the truck exemption
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Canadian goods at 50% tariff▼ ~$20bn
- Relief sought▲ 4 sectors