Canada’s former top trade envoy warns of rockier U.S. relations ahead

Steve Verheul said it seemed the two countries were on track to sign a deal last week, but the U.S. side tried to impose terms in the paperwork that made an agreement unworkable. Photo by Graham Hughes/Bloomberg

Article content

Article content

Steve Verheul, who negotiated on behalf of the government in Ottawa during Donald Trump’s first administration, weighed in on the state of ties between the nations after trade talks collapsed last week. New U.S. tariffs took effect Saturday and Prime Minister Mark Carney announced retaliatory measures.

Article content

Article content

Article content

“There’s clearly been some damage to the bilateral relationship between Canada and the U.S. It may take some time. In fact, it probably should take some time before we get onto a better track,” Verheul said during a Bank of Montreal event.

Article content

Article content

“We’re in a rocky period in the relationship between Canada and the U.S., and I think it’s likely to get even rockier before it begins to improve.”

Article content

Tensions between the two countries have been rising since talks to secure an interim trade deal broke down Friday night, leading to a new suite of 50 per cent tariffs from the White House.

Article content

Ontario Premier Doug Ford and Trump exchanged insults, with the leader of Canada’s largest province saying that Trump can “kiss my a——.” The U.S. president has threatened even more tariffs on Canada — 50 per cent tariffs on cars and auto parts — and said his administration was considering renaming Lake Ontario as Lake America.

Article content

Meanwhile, Vice President JD Vance gave a speech in Maine in which he called Canada a “state,” before saying it was a “Freudian slip.”

Article content

The Carney government sees little chance of resuming talks with the Trump administration before the November U.S. midterm elections, Bloomberg News reported earlier this week.

Article content

Article content

Verheul said it seemed the two countries were on track to sign a deal last week, but the U.S. side tried to impose terms in the paperwork that made an agreement unworkable.

Article content

Article content

That included the exclusion of aluminum-containing products and medium and heavy trucks from proposed tariff reductions, he said, as well as a demand for Canada to impose tariffs on steel and aluminum coming from other countries, which would have meant breaching agreements with those trading partners.

Article content

The U.S. was also “not prepared to accept any constraints on their ability to add further tariffs going forward,” he added.

Article content

“All of this generally would have locked Canada into a position where we would have had a very unbalanced trade relationship,” he said. “So I don’t think Canada had any choice other than to reject what was on the table at that point in time.”

Article content

For trade talks to pick back up, Verheul said there would likely need to be a kind of “temporary ceasefire” or “smaller climb-down from where we are now.”

Article content

He argued that pushing off the trade discussions until the countries begin formal talks in the review of the Canada-U.S.-Mexico Agreement might be a favourable outcome.

Article content

“I think also a consideration in all of this is that I think it’s clear that President Trump will get increasingly weaker over time with respect to his tariff policy,” Verheul said. “I think that the failure of his tariff policy, not just with Canada, but with other countries around the world will become increasingly evident and that could perhaps give us a bit of a greater advantage in future discussions.”

Article content

Article content

Article content