🇨🇦 Trump Says Canada and the U.S. Are Close. Are They?

By Dean Brown.

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Good morning,

For the first time in a while, there is actually some movement in the Canada-U.S. trade fight.

Mark Carney says he had a good conversation with Donald Trump over the weekend.

Trump went further.

He says Canada and the United States are “very close” to an agreement and that Washington already has a “concept” for a new trade deal. See what Trump and Carney actually said.

That sounds promising.

But there is an important distinction:

Trump has not released terms, a timeline or details about what Canada may have to give up to get one.

WATCH MY BREAKDOWN OF WHAT CHANGED IN THE CANADA-U.S. TRADE TALKS →

Only recently, there was not even a clear path toward restarting negotiations.

Now Carney and Trump are publicly talking about progress, and their teams are expected to keep working over the coming weeks.

That matters.

But there are still no published terms covering the biggest questions.

Steel.

Aluminum.

Autos.

Canadian counter-tariffs.

Or the broader trade relationship.

So when Trump says the countries are “very close,” I would treat that as his description of the negotiations, not proof that a finished agreement is sitting on somebody’s desk.

This is where things get more interesting.

Trump says the concept being discussed includes additional pipeline capacity between Canada and the United States, and he specifically brought up Keystone XL.

But Keystone XL itself was cancelled.

Joe Biden revoked its presidential permit in 2021, TC Energy terminated the project, and TC Energy later spun off its oil-pipeline business into South Bow.

South Bow is now considering a different project called Prairie Connector, which could use some previously installed Keystone infrastructure to move Alberta crude toward Wyoming.

There is still no final investment decision, with South Bow considering a decision in 2027.

So I would not describe this as:

The more accurate version is:

Exactly what that means remains unclear.

Canada still sends more than 90% of its crude-oil exports to the United States.

More pipeline capacity south could therefore be valuable for Canadian producers.

But Canada has also spent much of this year talking about reducing its dependence on the U.S. market.

Those goals are not necessarily contradictory.

Canada can build better access to Europe and Asia while also improving access to its largest existing customer.

The diversification strategy is not:

It is:

And this weekend gave us a pretty good example of what that looks like.

On Friday, Canada and the European Union officially launched the Alliance for the Future.

The name sounds grand, but there are actual agreements underneath it.

Canada and the EU say they want to create a “common prosperity and economic security space”.

The plan covers:

trade

technology

energy

critical minerals

financial markets

security

and movement between Canada and Europe.

Most importantly, the two sides agreed to spend the next year working out what an:

would actually look like.

That wording matters.

Canada is not joining the European Union.

We are not adopting the euro.

We are not getting seats in the European Parliament.

The two sides plan to define the new relationship by the 2027 Canada-EU summit.

There were several concrete announcements.

Canada and the EU concluded substantive negotiations on a new Digital Trade Agreement, designed to make cross-border digital business more predictable.

They completed negotiations on an agreement intended to bring more European investment into Canadian critical-mineral projects.

Canada will participate in the EU’s EuroHPC supercomputing system.

And negotiations will begin over Canadian access to Europe’s Galileo satellite-navigation system. See the full list of Canada-EU agreements.

That last one is particularly interesting.

GPS is controlled by the United States.

Canada is not abandoning GPS.

But access to Galileo would give Canada another major navigation system to rely on.

That is what diversification starts looking like in practice.

Canada and the EU also agreed to work on the possibility of greater LNG trade.

But be careful with the headline.

Europe did not agree to buy a specific amount of Canadian LNG.

The agreement is about exploring whether the infrastructure and economics make sense.

That distinction matters.

Canadian energy announcements have a habit of getting much bigger in headlines than the commitments underneath them.

Carney’s government tables Budget 2026 on Thursday, November 5. Finance Canada confirmed the date last month.

And before we even see the numbers, the fiscal debate is already taking shape.

The Parliamentary Budget Officer projects a:

But it also projects:

Those numbers are not the same thing.

A deficit measures the gap between government revenues and expenses.

Federal borrowing can be much larger because Ottawa also borrows to finance loans, capital investments, defence procurement and financial assets that are treated differently under government accounting. The PBO explains that distinction here.

The PBO also projects $333.3 billion in cumulative deficits over those five years and says the federal debt-to-GDP ratio would rise from 40.8% to 42.6% under its current baseline.

So the question Thursday is bigger than:

It is:

Defence.

Housing.

Industrial policy.

AI.

Infrastructure.

Major projects.

Trade diversification.

Ottawa is trying to do a lot at once.

Thursday is when we start seeing the bill.

Canada now has six federal by-elections underway for December 7.

They are:

Brantford—Brant South, Ontario

Scarborough North, Ontario

Laurier—Sainte-Marie, Quebec

Rosemont—La Petite-Patrie, Quebec

Saint-Hyacinthe—Bagot—Acton, Quebec

Yorkton—Melville, Saskatchewan

See Elections Canada’s official list of the six races.

I would not call them a national referendum on Carney or Poilievre.

But coming shortly after Thursday’s budget, they will give us an early look at how voters in several very different parts of Canada are responding.

Most Canadians turned their clocks back over the weekend.

B.C. and Alberta did not.

That means:

For anyone used to automatically adding three hours in the winter, that is going to take some getting used to.

The federal government notes that daylight-saving rules are determined provincially and can differ across the country.

Oil prices are falling this morning as diplomacy continues around the conflict involving the U.S., Israel and Iran.

Brent crude was down more than 3% in Monday trading, with markets reacting to continued Iran-Qatar talks and the absence of another major military escalation over the weekend.

That matters for Canadians because energy prices have been one of the biggest reasons inflation moved back above 3%.

But one day of falling crude prices does not mean gasoline suddenly becomes cheap tomorrow.

Pump prices also depend on:

refining

inventories

transportation

taxes

and local competition.

If oil keeps falling, though, it could eventually take some pressure off gasoline prices and inflation.

That is worth watching.

There is an interesting contradiction developing.

Canada just signed its deepest new framework with Europe in years.

At almost the exact same time, Canada and the United States may finally be moving closer to resolving part of their trade fight.

I actually think those two things fit together.

Diversification was never supposed to mean walking away from America.

The United States is still our biggest customer and probably will be for a very long time.

The goal is to make sure that when Washington becomes difficult, Canada has somewhere else to go.

If we eventually end up with better access to America and more options elsewhere, that is probably the strongest position Canada can be in.

Until tomorrow,

Dean

P.S. Thursday’s budget is going to be a big one. I’ll be watching whether Ottawa finally puts a real price tag and financing plan behind all of this talk about Canadian economic independence.