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Trefler speculated that, based on Greer’s tweet, concessions were potentially made in regards to provincial bans on American alcohol, Canada’s dairy supply management system and retaliatory tariffs on U.S. automobiles — things the Trump administration had used to justify the new levies.
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He added that Canada likely made concessions on several other items, including defence spending.
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The Canadian government had already made concessions before trade negotiations began, such as axing the digital services tax and regulatory levies on large streaming services with over $25 million in Canadian revenues
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“Canadians are rightfully angry, but we need to be careful that, in our anger, we don’t jump out of the frying pan and into the fire,” Trefler said.
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“We will need to make concessions.”
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What are the potential economic implications if concessions were made?
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That depends on what concessions were.
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“Canadian consumers do not have to buy American alcohol whether or not it’s on the shelves.… I see that as zero consequence,” Trefler said.
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“We’re largely tinkering at the margins on dairy, but we’re still not letting huge amounts of dairy in. I tend not to be too concerned about that.”
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However, concessions on Canada’s retaliatory tariffs on automobiles could have sweeping economic implications, he added.
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Trump imposed a 25 per cent levy on foreign cars and trucks last year, but gave Canada and the U.S. a partial break on car parts made in the U.S. If half a car is assembled in the U.S., that would have an effective tariff rate of 12.5 per cent.
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Canada and Mexico have been pushing for a tariff rate that applies to parts that aren’t sourced in North America instead.
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“If the new levies apply to parts of the car that aren’t made in North America, then I think we could live with that. If it applies to the part of the car only made in the U.S., it’s a little bit tougher. Is it catastrophic? Not in the short run, but maybe over a period of 10 years, it could be bad, especially if places like Windsor and Exeter are massively dependent on the auto industry,” Trefler said.
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Is there room for a more positive outcome?
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Yes. TD Economics said in an updated Q&A article that if negotiations result in relief on the Section 232 tariffs on metal products and other goods, that would mean a clearer path towards CUSMA renewal that would be an upside risk to growth.
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“For the time being, as the parameters of any new agreement are unknown, we assume no change to the tariff regime and expect Canadian growth to register 0.9 per cent in 2026, and 1.8 per cent in 2027,” the article read.
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Derek Holt, vice president and head of capital markets economics at Scotiabank, said in a note published on Wednesday morning that the odds of Canada getting a trade deal before the U.S. midterm elections had gone up.
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“If a deal that extends CUSMA and lowers uncertainty in a meaningful way were to be achieved, then it would be positive for Canadian economic growth and negligible for U.S. growth. It would buoy market and business sentiment toward Canada. It could put at ease consumer worries,” he wrote.
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What about Keystone XL?
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The expansion project was a bargaining chip for Trump throughout the trade negotiations. He posted on Truth Social post in February 2025 that he wanted to revive the project.
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In October, the National Post reported that Carney raised the idea of possibly revisiting the Keystone XL project to Trump during a visit to Washington, D.C., in the hopes of seeing progress made on a deal regarding the Section 232 tariffs on steel and aluminum.
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