Canada trade deal concept emerges as Trump and Carney revive talks

A thaw in the trade war, timed to the midterms

President Donald Trump said Sunday that Washington and Ottawa have the "concept" of a trade agreement. He spoke after a weekend phone call with Canadian Prime Minister Mark Carney, and the remarks were the clearest sign so far that the tariff war between the two neighbours could be ending. Speaking to reporters in Dubuque, Iowa, Trump called the outline "a very good deal" and said the two sides were "very close" to an agreement.11 He said the deal would be "great for our farmers, great for our country" and "fine" for Canada.1112

Carney posted earlier on Sunday that he had a "good conversation" with Trump. He said the call built on recent talks about the outlines of a deal meant to create jobs, make life more affordable for families and fully respect Canada's languages, culture and sovereignty.412 He added that both governments' teams would work "in the coming weeks" to finish it.16

The Globe and Mail cited a source familiar with the matter who said formal negotiations are expected to restart within days. That would be the first formal round since the summer. The same source said Trump told his team to resume talks after the Saturday call.16 A White House official, speaking on background, said the administration welcomed continued engagement with Canada as it works on "finalizing the details" of a deal.4

What is actually on the table

Very little has been made public. Trump gave no detailed terms.1613 He did name two pieces. The first is agriculture: he said that under the deal American farmers "will have to pay no tariffs."11 The Associated Press noted that his own comments showed the final details were still unsettled.12 Global News said Trump specifically mentioned dairy shipped to Canada. That would reopen one of the most sensitive files from earlier rounds.4

The second piece was more surprising: the Keystone XL pipeline. Trump said Canada would build the pipeline and pay for it, and that the US would provide a route that is "largely" already determined.1317 Reuters-based reports noted that nobody has explained how the project would come back. Keystone XL was a private venture, and its key federal permit was revoked by former President Joe Biden in 2021.17 TC Energy cancelled the expansion that year.11 The company later spun off its crude pipeline business as South Bow. South Bow is now working with Bridger Pipeline on a smaller 550,000-barrel-per-day line from Alberta to Wyoming called Prairie Connector, which would reuse some Keystone XL pipe already laid in Canada. A decision on that project is not expected until 2027.1719

Ottawa has not backed up the pipeline claim. Carney's office did not immediately answer questions about it.13 A spokesperson for Energy Minister Tim Hodgson declined to comment.17 A spokesperson for Dominic LeBlanc, the minister responsible for Canada-US trade, would say nothing beyond Carney's own remarks.19 That silence matters. Canada already sends more than 90% of its crude oil to the United States.17 A pipeline pledge could be an easy concession for Ottawa to make, or a promise Washington is announcing before Canada has agreed to it.

Steel and autos are almost certainly where the real bargaining will happen. Both sides have discussed relief from US tariffs on Canadian steel and vehicles, but no terms have been released.12 Interior Secretary Doug Burgum framed the pipeline as a win for American farmers and ranchers because it could lower diesel prices.11 That fits the farm-heavy pitch Trump is making before the vote.

How the two countries got here

The two leaders sound very different now than they did in August. Back then, Canada walked out of negotiations over US demands that Carney said threatened Canadian sovereignty, French-language protections and the auto industry.12 The Globe reported that Carney gave three main reasons. The US would not extend tariff relief to medium- and heavy-duty trucks, which put General Motors and Ford plants in Ontario at risk. It pushed for changes to how French-language content is surfaced on streaming services. And it proposed wording that Ottawa believed could limit Canada's ability to sign trade deals with other countries.16 At the time, Carney said the offer "asked too much and offered too little."16

Reports disagree on how much trade the tariffs that followed cover. The Hill says Trump's 50% tariffs, which took effect in late August, apply to $27.6 billion of Canadian products.11 The AP and Al Jazeera put the figure at about $20 billion. Al Jazeera says that equals roughly 5.5% of Canada's exports.126 Whichever number is right, the escalation is not in dispute. Canada matched the US tariffs in September.11 Al Jazeera reported that Canada's counter-tariffs hit US steel, dairy, appliances, farm equipment, pulp and paper, and electronics.6 According to The Hill, Trump then barred US businesses from importing nearly $1 billion worth of Canadian dairy, motor vehicles and many alcoholic drinks. He has also threatened 50% duties on Canadian cars, trucks, auto parts and steel starting January 1.11

That January 1 threat is the most important deadline in the story. If negotiators can't produce terms in the "coming weeks" Carney described, the auto sector faces another round of escalation early in the new year.

The midterm factor

The timing is hard to overlook. The call came two days before the November 3 US midterm elections.6 Tariffs on Canada have become a campaign issue in border states such as Michigan and Maine, where close Senate races could decide control of Congress.5 Michigan Republican Senate candidate Mike Rogers has called for an end to the tariff war.2 The Globe reported that Trump has been under pressure over affordability, as the economic damage from his tariff policy and the war in Iran has hurt his approval ratings.16

Canadian observers mostly see Washington as the side that moved. Daniel Béland, a political scientist at McGill University, told the AP that recent US tariff adjustments affecting Canada show the White House understands the political risk of its trade war, particularly in border states.12 Carney himself said last week that talks had picked up because Washington was moving toward Canada's position.12 As recently as October 28, though, he said Canada was "not at that position right now" when asked about a deal before the midterms.13 Global News read Sunday's statements as a sign that no agreement would land before election day.4

Reasons for caution

Both leaders are upbeat, but experts are much more cautious. Brian Clow, who helped negotiate the USMCA as a senior aide to Justin Trudeau, told the Globe that talking is good but people shouldn't "get your hopes up." He argued that the auto, steel and lumber files won't be settled without major US concessions. He also noted that a powerful US steel lobby wants the 50% tariffs to stay.16 In his view, Trump simply believes in tariffs and is happy to see production cuts in Canada as manufacturing moves south.16 He also suggested that a bad midterm result could change Trump's approach, especially if the president decides to blame Canada.16

University of Toronto historian Robert Bothwell likened the thaw to "five minutes of variable sunshine. Rain later."9 Flavio Volpe of the Automotive Parts Manufacturers' Association said any deal has to put Canada's auto, steel, aluminum and lumber industries back on a path to long-term profitability, not just stop the losses.16

Carney is not negotiating with an empty hand. Canada and the European Union launched a new alliance on Friday. Carney is pursuing "associate member" status with the bloc and aims to double exports to countries other than the US over the next decade.12 At home, Conservative leader Pierre Poilievre is pushing him to wrap up a deal, saying it is time to "put the big talk in the past and deliver real results."12

The reading

The reporting agrees on one thing: Sunday's news was a change in tone, not a finished agreement. Neither government has published terms or a timeline.133 The new information is procedural. Formal talks are restarting, and Trump personally ordered it.16 That is real progress, given that Canada's chief negotiator said only recently that there was no timeline for formal talks to resume.16

My reading is that the political incentives have finally lined up enough to get a deal started, but not to finish one. Trump wants farm-friendly headlines and a revived Keystone XL. Carney wants sovereignty protections and relief for autos and steel. Those goals overlap only partly. The truck tariffs, the language on Canada's freedom to trade with other countries, and the steel lobby's opposition are all still unresolved, and they are the same issues that sank the August talks. With the January 1 auto deadline approaching, the coming weeks will show whether this "concept" can become an actual agreement.