The U.S.-Canada trade standoff is threatening to stretch past the midterm elections. The White House is shrugging off the threat.
With a week to go before Canada imposes its retaliatory tariffs — aimed at key industries in states like Ohio and Texas with competitive Senate elections — tensions between Washington and Ottawa are at a steady simmer, with no sign of de-escalation.
Trump administration officials are united in the posture that the U.S. has the upper hand in the trade war, and risks exponentially less economic fallout than Canada. And they are signaling that the Canadian government, led by Prime Minister Mark Carney, will have to be the one to offer concessions to restart talks.
Privately, Trump officials are telling industry groups that the offer Canadian negotiators rejected on Aug. 21 is now moot, and they are no longer willing to make the same concessions on steel and aluminum tariffs, in particular.
The Canadians, meanwhile, have drawn a red line at key U.S. demands, like maintaining a 25 percent tariff on medium and heavy duty trucks. And Carney’s decision to stand up to Trump after months of rhetorical attacks and threats have helped produce a surge of Canadian patriotism and support for his Liberal Party, evidenced by their clean sweep of three special by-elections Monday.
The prime minister has little reason to back down ahead of votes in October in two provinces with strong separatist factions, who could challenge his political coalition.
As a result, both governments are digging in and readying for a longer trade war, all but guaranteeing the standoff bleeds into the fall campaign season.
Asked how Washington and Ottawa can find their way back to the table, a person familiar with the talks said, “You’ve got to get past the local elections in Canada.”
In the U.S., many Republicans fear the trade war will cut the other way, hurting the president’s party in the November congressional elections. House Republicans requested a meeting with U.S. Trade Representative Jamieson Greer later this week to discuss Trump’s new tariffs on Canada, amid rising unease in Congress.
The White House doesn’t believe the tariff tit-for-tat with Canada will really be a factor in the elections, however. Greer argued in an interview Monday with POLITICO Playbook that the duties are too small to move the U.S. economy, adding they are “more [Canada’s] emergency than ours.”
But polls show Trump’s trade policies are increasingly unpopular, and Democrats are determined to make them an issue over the next two months, particularly in border states with economies that are tightly intertwined with their Canadian neighbors’. Michigan Democrats launched new attacks Monday on Republican Senate candidate Mike Rogers for refusing to denounce the tariffs, with Democratic Senate candidate Abdul El-Sayed calling Trump an “asshole” for launching the trade war.
“They’re very damaging politically,” said Mike Madrid, a Republican strategist and vocal Trump critic, referring to Trump’s tariffs. “They’re hurting his base vote and the voters that he needs the most.”
There is still plenty of time between now and November, however, for negotiators to return to the table. Carney’s “dollar-for-dollar” retaliation goes into effect on Sept. 8 and Trump’s counter-counter measure — a threatened 50 percent tariffs on autos and auto parts — won’t go into effect until New Year’s Day, a sign both sides want to give space to negotiate a future truce.
And despite Trump’s weekend Truth Social tirade against Canada and his decision last week to rename Lake Ontario as “Lake America,” the president has shown a willingness to back down from his threats when presented with a good deal.
“Four months is, as you know, like an eternity for this president on tariffs. And so he gave them a lot of runway here to make their way back,” said one trade lobbyist, granted anonymity to discuss the sensitive talks.
In Ottawa, the political boost Carney is enjoying for standing up to Trump and pulling his negotiators out of talks last month will likely start to ebb as the economic impacts of the trade war deepen.
The tariffs Trump imposed on Canada hit $20 billion worth of imports, only about 5 percent of what the U.S. imports from Canada annually. Canada’s tariffs on the US, likewise, hit the same value. But the figure lands far harder north of the border, since the U.S. takes nearly three-quarters of Canada’s exports.
Given the economic risk, U.S. officials believe Carny has another, non-economic motive — using the tension with the U.S. to influence two key votes in October. In Alberta, home to Calgary, voters will decide on Oct. 19 whether to hold a referendum to secede from Canada. In Quebec, the secessionist party, Parti Quebecois, is in prime position to gain seats in the province’s legislative body on Oct. 8.
In one of Monday’s special by-elections, however, the candidate from Carney’s Liberal party edged out a Quebec separatist in a district hit hard by U.S. tariffs, giving the prime minister and his government new confidence ahead of the fall votes.
Separatist leader of the Parti Québécois Paul St-Pierre Plamondon, meanwhile, has vowed to not hold a referendum until Trump has left office to protect the issue from being “hijacked by the ups and downs of American politics.”
“Carney walked away for a reason,” said the trade lobbyist. “He’s going to continue to try to take advantage of this politically before maybe the concern about that very significant kind of ratcheting up of the economic pain on steel and autos could force him back to the table.”
Quebec’s French heritage has already emerged as a key sticking point in the trade negotiations with the U.S., with Carney’s government suggesting the U.S. tried to force Canada to back off a law that would require streaming platforms to promote French-language content in Canada.
Greer disputed that, saying the issue was really about Canada imposing its own regulations on U.S. companies and told the CBC “there is no way we would let a good deal go by for something like this.”
Canadian Minister for Trade with the U.S. Dominic LeBlanc said he “welcomed” the U.S. “withdrawing” its position on French language and culture requirements.
And Carney told reporters in Ottawa Tuesday morning that he viewed the offer the Trump administration made in August to lower some of its tariffs in exchange for trade concessions in Canada as unfinished work, not a done deal. “There were elements of that mutually beneficial deal that we were moving towards, which is why we were still at the table. But we never viewed that we had that deal, and it diverged towards the end,” Carney said.
“In my way of looking at it, both sides have opened the crack in the door to get back to the negotiating table,” said David Cohen, the U.S. ambassador to Canada under former President Joe Biden.
But the U.S. has also been clear that the original deal is now off the table — including a proposal to lower some metal tariffs from 50 percent to 25 percent, according to two people close to the administration, who were granted anonymity to discuss details that have not been made public. The domestic metals sector lobbied hard against that part of the tentative deal Trump announced on Aug. 18 — blowback that contributed to the deal unraveling days later.
In the meantime, Trump has continued to hammer the Canadians on Truth Social and in media appearances, suggesting the country has “ripped off” the U.S. for years.
Automotive Parts Manufacturers’ Association President Flavio Volpe, a member of Carney’s Advisory Committee on Canada-U.S. Economic Relations, predicted there would be more of that rhetoric before the two countries can restart talks.
“The [Trump] administration will need to get its Canada bashing campaign out of its system first,” Volpe said.
Carney echoed that in his remarks in Ottawa Tuesday, while adding that a mutually beneficial trade deal is still possible. “When the Americans stop doing memes, stop throwing shade, stop trying to be tough and start being serious about having those discussions, we can have those discussions.”