Congressional control may not change tariffs imposed through executive orders
Democratic candidates won major U.S. Senate contests in Michigan and Maine on Tuesday, delivering the result many in Canada had hoped for. “I was doing cartwheels down the street,” Ontario Premier Doug Ford said Wednesday morning, calling it “a victory for Canada.”
The result was unlikely to bring Canada immediate relief from the tariffs, but the political shift could create a more favorable environment for Ottawa to get the best deal as on-again-off-again trade talks resumed. U.S. voters cited affordability as a main concern entering the midterms, and a September survey by the Cato Institute suggested that about 75% believed tariffs had raised prices. Tariffs played a significant role in hard-fought races in states such as Maine and Michigan.
In Maine, incumbent Republican Senator Susan Collins clashed with the White House over tariffs. She successfully lobbied to remove some duties that directly affected the state, including tariffs on road salt, refrigeration equipment and seaweed, but lost the Senate race to Democrat Troy Jackson.
Michigan’s automobile manufacturing industry is deeply intertwined with Canada’s, and Democrat Abdul El-Sayed defeated Republican Mike Rogers there. Like Collins, Rogers sought to distance himself from Trump’s tariffs, declaring in a television advertisement last month that “Canada is not our enemy.” El-Sayed called the tariffs “dumb” and blamed them directly for driving up costs.
Trump’s 25% tariffs on non-U.S.-made cars and trucks have led to layoffs in Ontario and have contributed to thousands of dollars in additional household costs for Michiganders, according to an analysis by the U.S.-based National Taxpayers Union Foundation. In Ohio, Senator-elect Sherrod Brown, who defeated Republican Jon Husted, called the levies a “disaster” and vowed to slash costs for voters by getting rid of them. Democratic leaders such as Hakeem Jeffries and Chuck Schumer, newly empowered after the results, have pushed in recent months to rein in tariffs on Canada.
Democratic control of Congress might do little to change the tariffs because Trump’s levies had been largely enacted through executive orders without congressional approval. Speaking to Fox News on Tuesday night, Trump touted his “ultimate power” of veto to shut down congressional bills he disliked. Some Democratic lawmakers had also supported certain tariffs in the past as a way to protect American manufacturing jobs and could back keeping some in place.
Canada already faced several layers of U.S. tariffs, notably on autos, steel, aluminium and forestry. After talks between Ottawa and Washington collapsed in August, the Trump administration imposed an additional 50% tariff on $20bn (£15bn) of Canadian goods, from dairy to cosmetics and furniture. The United States also declared a total import ban on motorcycles, whey protein and alcohol.
Canada retaliated with its own 50% “dollar-for-dollar” tariffs, and most provinces banned the sale of U.S. alcohol. Trump had also threatened to escalate the trade war by raising tariffs on sectors, including auto manufacturing, as of January 1.
The administration had shown signs of becoming more sensitive to the optics of its Canada tariffs in the run-up to the election. A few days before the vote, Trump told reporters that a trade deal was “very close” after speaking with Prime Minister Mark Carney. On Tuesday evening, Carney struck a more optimistic tone on recent discussions, saying of the U.S. negotiators that “they’re asking less and they’re offering more.”
On Wednesday, US-Canada Trade Minister Dominic LeBlanc said the midterm results would not change anything in the short term. He dismissed speculation about what the new Congress might do when seated in January as “an interesting discussion at a faculty club luncheon” and said: “Our approach will not change and we don’t intend to speculate on the approach being taken by the Americans.”
Colin Robertson, a former Canadian diplomat and a fellow at the Canadian Global Affairs Institute, said Trump might feel more pressure to sign a deal now that American voters had clearly communicated their frustration. “Will this change Trump’s mind? It might, because he suffered such a beating at the polls,” Robertson said, while noting that Trump’s reaction to the midterm loss remained uncertain.
Robertson said Canada had an ideal window to finalize a deal between the election and January, when the new Democratic lawmakers would be sworn in. He said Trump was likely to be distracted after that by Democratic investigations into Trump’s family and finances and some members of his administration.
U.S. trade representative Jamieson Greer had said earlier in the year that he had ambitions to have interim deals in place with Canada and Mexico around the North American free trade deal, known as the USMCA in the United States and CUSMA in Canada, before the end of the year. Carney, while more optimistic in recent days, had told Politico the previous month that he was prepared to wait for a new American president if necessary to reach a deal with the United States.