Canada and the United States are not expected to reach a trade agreement before the U.S. midterm elections on November 3. Canadian officials have not closed the door on a snap deal, but sources told CTV News and BNN Bloomberg on October 22 that the hope is faint, and Prime Minister Mark Carney said a deal before the vote is unlikely.
The tariff wall stays in place. The United States put 50% duties on hundreds of Canadian goods, including plywood, liquor, electrical equipment and hockey gear, on August 22 after talks collapsed, Bloomberg reported. Canada has counter-tariffs on $27.6 billion of U.S. imports, according to AM800 News.
The Chain From the Midterms to Canadian Portfolios
The link runs through timing. The White House has little reason to concede before voters decide, and Canada says it will not return to tariff-free trade. Janice Charette, Canada chief trade negotiator, said "pens are down and the doors are open" and added, "I don't think we're going back." Her stated goal is to stabilize a relationship that is not currently stable.
Politics is already reshaping the list. On October 23 the White House removed seaweed, packing boxes and some plywood sheets from the 50% list and added cocoa powder, vinyl flooring, shampoos and carpets, with changes taking effect at the end of the month. Trade lawyer Robert Glasgow said more items were added than removed. Barry Appleton argued the overall tariff wall is unchanged.
For Canadian investors the exposure sits in exporters of the listed goods and in the Canadian dollar. A deal that is not expected is a tail risk to the upside, and the base case is that duties persist through the November 3 vote and beyond.
Why the Trade Data Look Better Than the Tariffs Imply
Statistics Canada reported that goods exports to the United States reached $54.3 billion in August, up 8.1% from July and 23.7% from August 2025. Energy exports rose 47.2% from a year earlier to $19.0 billion, and the goods surplus with the United States widened to $11.2 billion from $6.1 billion in July. Global Affairs Canada noted that exporters may have front-loaded shipments ahead of the August 22 tariffs, while exports to other countries fell 8.5%.
U.S. imports from Canada averaged US$31.8 billion a month in 2025 and have exceeded that average in every month since March 2026, the first full month after the Iran war began. August reached US$36.0 billion, 23.5% above August 2025.
U.S. imports from Canada averaged US$31.8 billion a month in 2025 and have exceeded that average in every month since March 2026. The 50% tariffs took effect August 22, so August captures only ten days of them, and Global Affairs Canada notes that exporters may have front-loaded shipments ahead of that date. Figures are nominal and not seasonally adjusted.
Oil is one reason for the gap between that strength and the tariff damage. Brent crude settled at US$72.48 on February 27, the day before the strikes on Iran began, and was about US$114.50 on October 25, down about 2% from a nearly six-month high, Al Jazeera reported.
The pattern is a masking effect, not a verdict on the tariffs. Higher prices lift the value of energy shipped south, and that value sits inside the same monthly totals that tariff-hit sectors are dragging down.
Hormuz Is the Second Clock
US Central Command said on October 25 that U.S. forces have helped Gulf states export more than 1.5 billion barrels since June, and that more than 95% of ships transiting the strait have done so safely. Kpler estimated that 16.5 million barrels a day left the region in September, matching the pre-war average excluding Iran.
The flows rest on workarounds. Kpler estimates that about 40% of Middle East oil exports now bypass the strait, and much of the crude that crosses is transferred between tankers offshore. UKMTO reported at least one attack a day in the Strait of Hormuz or the Gulf of Aden from October 2 to October 6.
Amin Nasser, chief executive of Saudi Aramco, said about three billion barrels of supply have been lost since late February and that rebuilding inventories could take up to two years. "The system is already straining," he said. Tamas Varga of PVM Oil Associates said the flows are sustainable as long as the East-West pipeline and ship-to-ship routes stay secure, and that only a sustainable and credible peace deal would restore pre-conflict conditions.
Base Case, Tail Risk and What to Watch
The base case is that no agreement arrives before November 3, the 50% duties persist, and oil above US$100 keeps energy export values elevated. The Bank of Canada decision on October 28 sits inside that frame, since Desjardins cited the retaliatory tariffs as an inflation risk.
Two tail risks cut in opposite directions. A snap deal, which Trade Minister Dominic LeBlanc told an advisory committee falls within the range where "anything is possible," would relieve the listed sectors. A durable Gulf settlement would lower the oil price and strip away the offset that is flattering the trade totals, exposing the tariff drag. Neither is the expected outcome, and each would reprice Canadian exporters and the loonie in different directions.
The dates to watch are the end of October, when the revised tariff list takes effect, and November 3, when the U.S. vote resets the negotiating clock. Carney spoke with President Donald Trump on October 21 about trade and the Iran war, and his office issued no formal readout.