OTTAWA, Nov. 5 — Canadian Prime Minister Mark Carney and U.S. President Donald Trump signaled on November 1 they are closing in on a reciprocal trade agreement framework, describing a “good conversation” about the future of bilateral commerce after months of tariff confrontation.
Carney said on social media that teams from both sides would work closely in the coming weeks to finalize a deal that would create jobs, lower household costs and “fully respect Canadian sovereignty.” Trump, speaking to reporters, said a “very good deal” was “very close,” while reiterating his claim that the United States has run trade deficits with Canada “for 70, 75 years” — a characterisation official data do not support. The U.S. goods and services deficit with Canada in 2025 was approximately $27 billion, a fraction of the roughly $880 billion in two-way trade, according to U.S. government data.
The thaw follows a turbulent stretch: Washington imposed a 50% duty on approximately $20 billion worth of Canadian goods, and Ottawa retaliated with counter-tariffs on U.S. imports. Canada is the only G7 country without a deal offering tariff relief from the Trump administration, and is seeking exemptions from duties of up to 50% on steel, aluminum and automobiles.
In parallel, Canada is accelerating a pivot away from over-reliance on the U.S. market. At the 21st Canada–EU Summit in Montreal in late October, the two sides launched the “Canada-EU Alliance for the Future” and agreed to pursue an “ever closer association” — language adopted after Germany, France, Italy and Greece objected to Carney’s preferred framing of Canada as an EU “associate member,” a status with no legal basis in EU treaties. The joint statement commits the two sides to “work to define by the 2027 EU-Canada Summit the concept of an ever closer association of Canada to the EU, short of full membership itself”. Carney had earlier floated a June target for concluding negotiations on associate membership, a timeline that the final declaration does not adopt.
The Montreal declaration also concluded substantive negotiations on a Digital Trade Agreement to complement the existing CETA framework, announced joint initiatives for new subsea cable infrastructure linking Canada, Europe and Asia, and included a joint long-term feasibility study on Canadian liquefied natural gas exports to Europe.
Economists caution that any U.S. deal still faces ratification hurdles and that supply-chain fragmentation risks persist, but the twin tracks — a reset with Washington and a deepening partnership with Brussels — mark the most concrete recalibration of Canadian trade policy in years.
— VGMG North America Geopolitics & Trade Desk