US midterm results a 'victory' for Canadians hopeful of tariff relief

It was the midterm result that many in Canada had hoped for - a Democratic sweep that was in part a repudiation by American voters of Donald Trump's tariff on close trade allies.

"I was doing cartwheels down the street," said Ontario Premier Doug Ford on Wednesday morning, calling it "a victory for Canada".

Tuesday night's result is unlikely to grant Canada relief from those tariffs any time soon, but there is anticipation that the political shifts could create a more favourable environment for Ottawa to get the best deal now that on-again-off-again trade talks are back on.

US voters cited affordability as a main concern heading into the midterms and a survey by the Cato Institute in September suggested that about 75% believe the tariffs have raised prices.

In states like Maine and Michigan, tariffs played a significant role in the hard-fought races.

In Maine, incumbent Republican Senator Susan Collins clashed with the White House over tariffs.

She successfully lobbied to have some duties that directly affected the state removed, including on road salt, refrigeration equipment and seaweed, but in the end lost to Democrat Troy Jackson.

A similar story played out in Michigan, where state's the automobile manufacturing industry is deeply intertwined with Canada's - and where Democratic candidate Abdul El-Sayed defeated Republican Mike Rogers.

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Trump's 25% tariffs on non-US made cars and trucks have led to layoffs in the province of Ontario, and have contributed to thousands of dollars in additional household costs for Michiganders, according to an analysis by the US-based National Taxpayers Union Foundation.

Like Collins, Rogers sought to distance himself from Trump's tariffs, declaring in a TV ad last month that "Canada is not our enemy".

El-Sayed, meanwhile, bluntly assessed the tariffs as "dumb" and blamed them directly for driving up costs.

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 like Hakeem Jeffries and Chuck Schumer, now newly empowered, have both pushed to rein in the tariffs on Canada in recent months.

Still, Democratic control of Congress might not do much to move the needle on tariffs. Trump's levies have been largely enacted using executive orders without approval from Congress.

And speaking to Fox News on Tuesday night, Trump touted his "ultimate power" of veto to shut down bills passed by Congress that he does not like.

Some Democratic lawmakers have also supported certain tariffs in the past as a way to protect American manufacturing jobs, and could back keeping some in place.

There are currently several layers of tariffs on Canada, notably on sectors like autos, steel, aluminium and forestry.

After trade talks between Ottawa and Washington collapsed in August, the Trump administration imposed an additional 50% tariff on $20bn (£15bn) worth of various Canadian goods, from dairy to cosmetics and furniture.

The US also declared a total import ban on motorcycles, whey protein and alcohol.

Canada retaliated by slapping the US with its own 50% "dollar-for-dollar" tariffs. Most provinces have also banned the sale of US alcohol in retaliation.

Trump had also previously threatened to escalate the trade war with Canada further by ⁠raising tariffs on sectors, including auto manufacturing, as of 1 January.

There were signs that his administration had become more sensitive to the optics of its tariffs on Canada in the run up to the election.

Just a few days before the vote, Trump told reporters that a trade deal is "very close" after speaking with Prime Minister Mark Carney.

Speaking to reporters on Tuesday evening, Carney said of US negotiators that "they're asking less and they're offering more" in recent discussions.

On Wednesday, US-Canada Trade Minister Dominic LeBlanc said the midterm results won't change anything in the short term, and dismissed speculation over what the new Congress might do when they're seated in the new year as "an interesting discussion at a faculty club luncheon".

"Our approach will not change and we don't intend to speculate on the approach being taken by the Americans," he said.

Trump may feel more pressure to sign a deal with Canada now that American voters have clearly communicated their frustration, said Colin Robertson, a former Canadian diplomat and a fellow at the Canadian Global Affairs Institute.

"Will this change Trump's mind? It might, because he suffered such a beating at the polls."

But he added it remains to be seen how Trump will react from the bruising midterm loss.

Canada has an ideal window between now and January - when the new Democratic lawmakers are sworn in - to finalise a deal, Robertson noted.

After that, Trump is likely to be distracted by investigations launched by Democrats into Trump's family and finances and some members of his administration, Robertson said.

US trade representative Jamieson Greer also said earlier this 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 US and CUSMA in Canada, before the end of the year.

And while Carney struck a more optimistic tone in recent days on the current state of Canada-US trade talks, he also told Politico last month that he was prepared to wait for a new American president if necessary to reach a deal with the US.