Carney sees momentum in US trade talks but offers no timetable

For the loonie, Carney's comments amount to modest support: any softening of the 50% US tariff would take some weight off Canadian exporters and off the growth outlook. Without a timeline, though, there is a limit on how large a trade-deal premium can accumulate, which leaves USD/CAD more attuned to the US midterm results and to oil prices in the near term. Canada supplies more crude to the US than any other country, so a wider settlement would also remove one source of uncertainty for North American energy flows. Among those standing to gain most should the talks succeed are the US exporters of steel, dairy goods and farm equipment that Canada's counter-tariffs have hit.

-

Since the collapse of the talks in August, Carney has not sounded so hopeful about a US trade deal — yet he takes care not to promise one.

At a glance:

• Trade discussions with Washington are set to become more intensive, Carney said
• According to him, some red lines have been removed while others still need to be dealt with
• Washington, he said, is now asking for less and offering more, though the two sides have not reached that point
• He also said negotiators do not always need to be in direct contact with the USTR, since the channels of communication are good
• After the August breakdown, the US imposed a 50% tariff on roughly $20bn of Canadian goods, and Canada retaliated
• The remarks come as Americans cast their ballots in the midterm elections

Trade discussions between Canada and the United States are going to become more intensive, Prime Minister Mark Carney said, reporting progress while warning that significant areas are still unresolved and that a deal has not been reached.

According to Carney, certain red lines in the negotiations have been taken off the table, though others still require attention. Washington's changed stance, he said, amounts to the US seeking less and giving more — but he stressed that the two sides had not arrived there yet.

The need for formal rounds of negotiation was also played down by the prime minister. Canadian trade negotiators do not, in his view, always have to be talking directly with the Office of the US Trade Representative, given the open lines of communication between the two governments.

The remarks follow the update Carney gave at the weekend, in which he described a good conversation with President Donald Trump. Teams from both countries would, he said at the time, spend the coming weeks working on the outlines of a deal. Trump, for his part, said last week that he anticipated a new agreement before long, without offering details.

What the talks are seeking to mend is a relationship that soured sharply in August, at the point when negotiations failed. Trump at that time placed a 50% tariff on some $20bn of Canadian goods, equal to roughly 5.5% of Canada's exports. Ottawa answered in kind, with matching tariffs on US products that include steel, dairy, appliances, farm equipment, pulp and paper, and electronics.

Compared with anything heard since that breakdown, Carney's tone is markedly more buoyant, yet he chose his words so as not to suggest an agreement was imminent. The unresolved areas and remaining red lines he returned to more than once imply that the hardest questions are still on the table, and he offered no timeline for a final deal.

Politics enters through the timing. Americans go to the polls in Tuesday's midterm elections, and in states such as Michigan and Maine the trade standoff with Canada is a live issue. How much latitude the White House has for compromise in the weeks ahead could be shaped by the outcome.

The two men are due to cross paths at the APEC summit in Shenzhen, China, which runs from November 17 to 18.