Trump told a Michigan border rally on Sunday that a Canada agreement is close and that Ottawa is willing to give the United States “anything.” Canadian officials say no deal is expected before the November 3 midterms, and Dominic LeBlanc says Canada will not be rushed.
OTTAWA, Monday, October 26, 2026
OTTAWA, Oct. 26, 2026 – President Donald Trump told a campaign rally in Port Huron, Michigan, on Sunday that the trade dispute with Canada would be settled soon and that Canada was “willing to give us anything at this moment,” remarks that were immediately discounted in Ottawa, where officials say they do not expect an agreement before American voters go to the polls on November 3.
Speaking nine days before the midterm elections in a border city that has absorbed heavy costs from the dispute, Trump defended his tariff programme and accused Canada of “ripping off the United States for years,” according to coverage of the rally. The remarks were the most expansive public comment on the state of negotiations since talks collapsed in August, and they followed a proclamation signed two days earlier that adjusted which Canadian goods face an additional 50 percent duty.
Kevin Hassett, the White House economic adviser, has told reporters that Washington and Ottawa are “very close to finally having a deal.” Canadian officials describe the timeline differently. Trade Minister Dominic LeBlanc has said Canada will not rush into terms that conflict with its interests, and Canadian officials have indicated they do not anticipate an agreement before November 3.
Two governments, two clocks
The gap between the two accounts is less a disagreement about substance than a disagreement about urgency, and the source of that asymmetry is the American electoral calendar.
The administration is nine days from a national vote in which the tariff programme has become a liability in precisely the states that border Canada. The Washington Post reported on October 25 that the trade war has hurt Republican candidates in key races. Two days before that, the same paper reported that Trump had rolled back some Canada tariffs in a move that helps Republican candidates, a characterisation reinforced by Senator Susan Collins of Maine, who said publicly that she had lobbied for the change and had secured exemptions for products crucial to Maine’s blueberry, potato, apple and seaweed producers.
Ottawa faces no equivalent deadline. Prime Minister Mark Carney’s government is not before the electorate, and the political logic in Canada runs in the opposite direction. Public support for the counter tariff response has been broad, and a government seen to be accepting unfavourable terms under American electoral pressure would pay a domestic price that no plausible tariff relief would offset.
There is also a straightforward negotiating reason to wait. If the administration’s appetite for a settlement is driven in part by the midterms, the terms available after November 3 may differ from the terms available before it, in either direction. Canadian negotiators appear to have concluded that finding out is worth more than closing early.
How the talks broke down
The current standoff traces to a collapse in August. Three proclamations signed on July 20, 2026 imposed a 50 percent duty under Section 338 of the Tariff Act of 1930 on specified categories of Canadian goods covering dairy, alcoholic beverages and a broad motor vehicles list, with an announced effective date of August 19. A short suspension followed while negotiations continued.
Those negotiations failed shortly before a midnight deadline, and the duties took effect on August 22 on roughly 20 billion dollars of Canadian goods, a basket that ranges from some dairy products and alcoholic beverages to cement and hockey equipment. Carney attributed the breakdown to “last-minute changes in the U.S. proposed terms,” and has since pointed to the auto tariff question as the specific point of failure. The Prime Minister has described the measure as reaching roughly 28 billion dollars in Canadian goods, with oil, gas and potash exempted.
Canada’s response came on September 8, when counter tariffs took effect on more than 700 American tariff lines at rates ranging from 15 to 50 percent, covering steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. The Globe and Mail reported Ottawa’s strategy as targeting 27.6 billion dollars in American products, paired with support measures for affected workers and businesses.
Washington escalated again. On September 15 a first scope modification removed rock salt, cement and fishing rods from the Section 338 list while adding 122 classifications, including all terrain vehicles and additional dairy products. On September 29, outright import exclusions took effect for covered motor vehicles, dairy and alcoholic beverages, barring those goods from entry and from placement in foreign trade zones, bonded warehouses or in bond movement. Section 338 permits exclusion, not merely taxation, where a finding of discrimination persists.
What the two sides actually need
The public positions obscure a narrow set of genuine disputes.
The White House fact sheet accompanying the October 23 proclamation says Canada “walked away from a near-final trade deal” over the summer and imposed retaliatory tariffs on about 20 billion dollars of American exports. Washington’s substantive grievances, as recorded in the administration’s own materials and in reporting on the Section 338 findings, centre on Canadian duties and quotas affecting autos, a halt to Canadian provincial purchases of American alcohol, and the tariff rate quota structure that governs access to the Canadian dairy market.
Canada’s requirements are equally specific. Ottawa wants the auto tariff question resolved on terms that preserve the integrated North American vehicle manufacturing footprint, since that integration is the single largest Canadian interest in the relationship. It wants an end to the use of Section 338, a statute that had not been invoked before this year and that applies to CUSMA originating goods, because a mechanism that overrides the agreement makes the agreement itself unreliable. Supply management in dairy remains politically immovable in Canada, which is why it keeps appearing at the point where talks fail.
Bloomberg reported in August that the two sides had been close to agreement on halving the Section 232 steel and aluminum tariffs. That such a specific landing zone existed and was not reached illustrates the structural problem. The negotiable items are negotiable, and the items that break the talks are the ones neither side can trade.
Hassett’s complication
Hassett has pointed to Canadian domestic politics, including a vote on Alberta secession, as a complicating factor in the talks. The reference is worth examining, because it indicates how Washington is reading Canadian political capacity.
Alberta voters rejected secession, and the premise that provincial constitutional politics constrains federal trade negotiating authority is not well founded. Trade policy is a federal competence. What provincial politics does affect is the political cost of concession, and on that measure the Hassett observation has some force in a different direction than intended. Ontario Premier Doug Ford has been among the most vocal advocates of a hard line, and the joint federal and provincial industrial support package announced on October 21 bound Ottawa and Queen’s Park together in a posture of structural adaptation rather than accommodation.
“No matter what happens in the midterms, no matter who sits in the White House, we’re not going back to the way things were,” Ford said at the announcement. Carney’s framing was similar. “Their approach has changed,” he said. “So must ours.”
That is not the language of a government preparing to sign. It is the language of a government preparing to live without a signature.
The diplomatic temperature
The relationship has deteriorated beyond the tariff schedule. The United States Embassy in Ottawa accused Canadian politicians of attempting to influence the November midterm elections, naming Industry Minister Melanie Joly over comments about retaliatory tariffs targeting Republican states and Ford over a Canadian funded American television advertisement featuring Ronald Reagan criticising tariffs.
Both leaders rejected the accusation, as did independent analysts. Daniel Beland of McGill University called the suggestion that Canada could meaningfully affect the midterms “absurd.” The episode nonetheless illustrates how far the relationship has moved from its ordinary operating mode, and it raises the risk that a negotiation conducted against this backdrop produces an agreement neither side’s domestic audience will accept.
Carney and Trump spoke by telephone on October 21 about trade, Iran and the Middle East. Carney reported no breakthrough but repeated that Canada is ready to negotiate. That exchange, two days before the proclamation that reshuffled the tariff annexes, is the most recent confirmed leader level contact.
What a deal would have to contain
Any agreement capable of being signed would have to resolve four questions.
It would have to settle the auto tariff treatment, which is the issue that broke the August talks. The integrated vehicle and parts supply chain is the largest single component of the bilateral manufacturing relationship, and Canadian auto exports to the United States are already down more than 10 percent.
It would have to address the Section 338 measures directly rather than by scope modification. Trimming annexes does not restore the certainty that CUSMA was meant to provide, because the statute remains available and the President retains authority to suspend, revoke, supplement or amend proclamations under it. Canadian exporters cannot plan capital investment against a schedule that can be rewritten with seven days notice.
It would have to establish what happens to Canada’s counter tariffs. Those measures were explicitly constructed as a dollar for dollar response and would be expected to come off in step with the American measures, but the sequencing and the treatment of duties already collected are genuine negotiating items.
Finally it would have to deal with the Section 232 steel, aluminum and copper tariffs, which sit outside the Section 338 architecture and operate on a national security rationale that the administration has applied globally. The reported August understanding on halving those rates suggests a landing zone exists.
The economic stakes
The cost of continued deadlock is no longer theoretical.
Canada entered a technical recession this year after two consecutive quarters of contraction, with tariff exposed manufacturing among the weakest sectors. Canadian steel exports to the United States have fallen by roughly half since the duties took effect. Lumber exports were running about 20 percent below 2024 levels earlier this year on Bank of Canada figures. Employment fell by 68,300 in September, a second consecutive monthly decline, with unemployment edging higher and wage growth slowing to about 2.3 percent year over year. Cleveland-Cliffs confirmed layoffs at its Hamilton, Ontario plant on the same day the federal and Ontario governments announced their support package.
Roughly 70 percent of Canadian exports go to the United States, which is the number that explains why Ottawa keeps negotiating despite the diplomatic friction.
The American side is not insulated. American exports to Canada have fallen more than 20 percent. Alcohol exports to Canada fell 81 percent, from roughly 718 million dollars to about 137 million, comparing the twelve months to February 2026 against the prior year. Vehicle exports to Canada fell about 22 percent, from roughly 25.9 billion dollars to 20.3 billion. Prices for tariff affected goods in the United States have risen about 6 percentage points more than comparable untaxed products.
This is the context in which Trump’s claim that Canada is “willing to give us anything” should be read. Both economies are absorbing damage, and the Canadian government has been explicit that it regards the damage as survivable and the alternative as worse.
The litigation variable
A third party may decide the question before either government does.
Gellert Global Group Corp., an American importer of Canadian cheese, filed suit in the United States Court of International Trade on October 20 challenging the Section 338 action. The company imported roughly 71 million dollars of Canadian cheese in 2025 and estimates the duties at about 40 million dollars annually. Its complaint argues that Section 338 does not authorise the tariffs, that Section 301 of the Trade Act of 1974 is the governing statute, that the administration has not tied the 50 percent rate to any measured burden, and that the September scope change violated a 30 day notice requirement by taking effect seven days after proclamation. The Liberty Justice Center has filed a parallel challenge.
An adverse ruling would remove the administration’s principal leverage and would reset the negotiation entirely. It would also create substantial refund exposure, since Gellert seeks refunds with interest on entries made before October 8, 2026. Neither case has been decided, and the Court of International Trade has not previously ruled on the scope of Section 338, which had lain dormant for more than nine decades.
What businesses should do with the signal
For Canadian exporters and American importers, the correct response to Sunday’s remarks is to treat them as weather rather than climate.
Firms should not delay operational decisions on the expectation of an imminent settlement. The concrete, dated event this week is Friday’s scope change, which is certain, and the Bank of Canada’s rate decision on Wednesday, where markets price a quarter point increase to 2.50 percent. A trade agreement is neither dated nor certain. Planning assumptions should reflect that difference.
Firms should nonetheless prepare for the possibility that relief arrives abruptly. If an agreement is concluded after November 3, duty treatment could change quickly, and firms holding inventory purchased at tariffed cost would face competitors restocking at lower landed cost. Inventory positions built as tariff hedges should be sized with that reversal risk in mind.
Firms should diversify where the economics permit. Carney has set a target of doubling Canadian exports to non United States markets within a decade. Governor Tiff Macklem said in remarks reported on October 26 that while he hopes for a more normal relationship with the United States, he does not expect a return to the previous trading environment under a protectionist American administration. That is the planning assumption Canada’s central bank is using.
Finally, firms should keep their compliance position current regardless of the diplomatic weather. The annexes change on Friday whether or not a deal is close, and duty liability is determined by entry date and tariff classification, not by what was said at a rally in Michigan.
Provincial pressure and the limits of federal room
Canadian trade policy is federal, but the political weather that constrains it is substantially provincial, and the provinces most exposed have been the loudest.
Ontario carries the auto and steel exposure and has been the most forward leaning. Premier Doug Ford committed provincial money to the joint 6.2 billion dollar industrial package announced on October 21, of which 3.7 billion dollars goes to steelmakers and 1.8 billion dollars to automakers over five years, with Ottawa providing 1.1 billion dollars of the auto component. Separate reporting has described a combined federal and Ontario industrial aid envelope of 8.7 billion Canadian dollars. Ontario also funded the American television advertisement featuring Ronald Reagan criticising tariffs that drew an accusation of election interference from the United States Embassy.
Ontario ministers have pressed a second front on softwood lumber, describing the American duties as unjustified after the Commerce Department reset the combined antidumping and countervailing rate in mid October to 24.75 percent and calling for the duties to be removed entirely.
Saskatchewan has taken a quieter line. Premier Scott Moe said in August, during the suspension period before the duties took effect, that the threatened 50 percent tariff on nearly 30 billion dollars of Canadian goods was not coming into force and that bilateral negotiations were continuing. It came into force three days later. The episode is a useful caution against treating optimistic statements from either capital as operational guidance.
Provincial governments have also layered their own support. Ontario has made roughly 10 billion dollars available in business cash flow support, and Alberta increased its contingency provision by 2 billion dollars. These are liquidity measures rather than compensation, and they do not alter the landed cost of a shipment.
The CUSMA question behind the tariffs
The deepest issue in the negotiation is not the rate. It is whether the agreement that governs North American trade still binds.
Section 338 of the Tariff Act of 1930 permits duties of up to 50 percent where a trading partner is found to discriminate against American commerce, and permits outright exclusion of that country’s products if the discrimination continues. The administration has used both powers. Import exclusions took effect on September 29 for covered motor vehicles, dairy and alcoholic beverages, barring those goods from entry and from foreign trade zones, bonded warehouses and in bond movement. The duties apply whether or not a good originates under CUSMA.
That last point is the structural wound. CUSMA was negotiated, ratified and implemented on the understanding that originating goods receive preferential treatment. A domestic statute that overrides the preference, and that the President may suspend, revoke, supplement or amend at will, reduces the agreement to a document that holds only while Washington chooses to honour it.
Canadian negotiators therefore face a problem that no tariff schedule solves. Even a complete removal of the Section 338 measures would leave the statute available for reuse. Ottawa’s interest is in a binding commitment not to invoke it, which is a harder thing for an American administration to grant than a rate reduction, because it constrains successors.
The scheduled joint review of CUSMA gives both governments a procedural venue in which to address this. It also gives Washington a venue in which to press the auto, alcohol and dairy grievances that broke the summer talks. Canadian firms should expect the review to become the centre of gravity for the dispute once the midterms pass, and should expect it to run far longer than the current news cycle.
Sector stakes if talks fail again
A continued standoff does not distribute its costs evenly, and Canadian firms should understand where they sit.
Dairy and processed food carry the heaviest direct exposure, since cheese and other dairy lines were brought into the 50 percent list and then into the exclusion orders. The Gellert litigation exists because the economics of that trade have become impossible at the duty. Canadian processors have lost American volume that will be difficult to recover.
Steel and aluminum carry layered exposure. These sectors face Section 232 duties on national security grounds, which operate independently of Section 338 and of any bilateral settlement, and they face Canadian counter tariffs on American input purchases. A bilateral deal that resolves Section 338 without touching Section 232 leaves most of the steel problem in place.
Autos carry the largest absolute exposure and the most integrated supply chain. This is the sector that broke the August talks and the sector least able to adapt, because a vehicle assembly footprint cannot be relocated on a tariff timetable.
Forest products are in the most complicated position, with softwood lumber duties at 24.75 percent, a Section 232 timber tariff, and plywood moving off the Section 338 list on October 30 while thin medium density fibreboard moves toward capture. Firms in this sector need line level analysis rather than sector level commentary.