Canadian Prime Minister Mark Carney reported a modest increase in dialogue with the United States regarding an unfinished trade agreement that could ease U.S. tariffs on Canadian goods, including automobiles, steel, and aluminum. However, Carney declined to specify how close the two countries are to reaching a deal, emphasizing that any progress is due to Washington moving closer to Ottawa’s established positions.

The ongoing trade discussions come as the White House seeks a breakthrough before the U.S. midterm elections on November 3. President Donald Trump has expressed a desire to demonstrate efforts to reduce the cost of living for American voters, intensifying efforts to resolve the trade dispute that began in 2025.

Carney reiterated concerns about the reliability of a U.S. signature on any trade agreement, referencing his August statement that the American commitment was written “in pencil,” signaling potential fragility. When asked if a future deal might be more durable, Carney remained uncertain.

Trade talks collapsed in August after Canada rejected a U.S. proposal that Carney characterized as unfavorable, arguing it demanded too much while offering little in return. The Prime Minister cited three main issues for walking away: the U.S. refusal to extend tariff relief to medium- and heavy-duty trucks, concerns over proposed changes affecting the discoverability of French-language streaming content, and language that could limit Canada’s ability to negotiate future trade deals. U.S. officials have disputed Ottawa’s interpretation of the latter two points.

Carney stated Canada remains willing to sign a deal but only one that aligns with clear "red lines" to protect Canadian interests. He said any forward movement is because the U.S. is adopting positions closer to those of Canada.

Industry figures expressed cautious optimism amid the talks. Candace Laing, CEO of the Canadian Chamber of Commerce and member of Ottawa’s advisory committee on Canada-U.S. economic relations, noted a possibility of a deal by early November, though she indicated the likelihood is not high. Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, pointed to a potential window given perceived U.S. flexibility tied to Trump’s midterm strategy.

Conversely, a Canadian official downplayed expectations for an imminent agreement, noting no formal exchange of documents or official delegations recently dispatched to Washington.

Last week, President Trump exempted several Canadian products, such as paperboard cartons and refrigeration equipment, from the steep 50% tariffs imposed in August. The White House indicated other Canadian imports would face new levies to maintain overall tariff levels. Volpe described this move as signaling U.S. flexibility aimed at midterm electoral gains.

While U.S. Republicans appear likely to lose control of the House, they may retain the Senate, where many contested seats are in states economically tied to the Canada-U.S. relationship.

Trump has maintained a critical stance on Canadian trade practices but expressed optimism about a swift resolution during a recent Michigan rally.

A spokesperson for Canadian Trade Minister Dominic LeBlanc confirmed ongoing “constructive dialogue” on multiple priorities and emphasized Canada’s readiness to negotiate a mutually beneficial agreement that protects its interests.

Industry sources report that current discussions primarily focus on Section 232 tariffs on autos, steel, and aluminum. U.S. and Canadian officials have reportedly identified potential compromises on auto tariffs, with efforts to align a Canada-U.S. deal with a parallel one being negotiated with Mexico.

The U.S. Commerce Department, led by Secretary Howard Lutnick, and the Office of the United States Trade Representative are active participants in the negotiations. While much was reportedly resolved before August’s breakdown, sources acknowledged that several key issues remain.

Skepticism persists over the prospects for a pre-election agreement. Some U.S. sources noted limited indications of substantive negotiations at present, cautioning that meaningful tariff relief, particularly on autos and metals, remains unlikely in the short term.

Canadian trade officials were reportedly in Washington last week, but officials framed this as part of ongoing informal communications rather than formal talks.