Former U.S. Trade Official Says Trump Will Keep ‘Driving the Train’ on Canada Even if Democrats Win Midterms

35,000+ smart investors are already getting financial news, market signals, and macro shifts in the economy that could impact their money next with our FREE weekly newsletter. Get ahead of what the crowd finds out too late. Click Here to Subscribe for FREE.

A change in Congress may alter the political pressure around Donald Trump’s trade agenda, but it may not change who sets the direction. That is the warning from Dan McCarthy, a former assistant U.S. trade representative, who said ahead of the November 2026 midterms that he expects Trump to keep “driving the train” on trade regardless of the election result. For Canada, the distinction matters. The bilateral relationship is already being tested by tariffs, counter-tariffs, an unresolved CUSMA review and new U.S. restrictions on Canadian products. Democrats winning one or both chambers could create tougher oversight and new attempts to reclaim congressional authority over tariffs. Yet the presidency would remain in Republican hands, and several powerful trade statutes would still sit with the executive branch. Canada therefore has to prepare for a political landscape in which Congress may change the brakes, but Trump can still hold the steering wheel.

Why McCarthy’s Warning Matters Now

McCarthy’s warning lands at a particularly tense moment in the Canada-U.S. relationship. Global News reported on October 4 that the former senior U.S. Trade Representative official expects President Trump to remain the central force on trade even if Democrats make gains in the November midterms. McCarthy is not speaking as a casual observer: he previously served as assistant U.S. trade representative for congressional affairs and worked on issues that included USMCA enforcement, critical minerals, electric vehicles, advanced batteries, and steel and aluminum policy.

That background makes the wording important. Saying Trump will be “driving the train” does not mean Congress is powerless. It means the administration is likely to keep setting the pace, choosing the disputes and deciding which executive trade authorities to use unless Congress successfully changes the law. That distinction is already visible in 2026. After the Supreme Court eliminated one major tariff route, the administration shifted to other statutes rather than abandoning its tariff strategy. For Canadian governments and companies, the practical lesson is that a midterm result by itself would not automatically end the trade confrontation.

The Midterms Can Change Congress, Not the President

The November 3 midterms can reshape Washington, but they cannot remove Trump from the presidency. All 435 House seats are on the ballot, along with roughly one-third of the Senate. As of October 1, Republicans held a razor-thin House advantage of 218 seats to 214 for Democrats, with one independent and two vacancies. In the Senate, Republicans held 53 seats, Democrats 45 and independents two. That makes control of at least one chamber a realistic political prize with major consequences for oversight, committee leadership and legislation.

A Democratic House or Senate could summon trade officials, demand documents, hold hearings and force uncomfortable votes on tariff authority. A Democratic majority in both chambers could go further by passing legislation designed to narrow powers that Congress previously delegated to presidents. But a midterm victory would not transfer executive authority to lawmakers. Trump would still direct the U.S. Trade Representative, Commerce Department and other agencies involved in trade enforcement. He would also retain the presidential veto. Unless Democrats assembled enough support to enact restrictions that survived a veto—or built a two-thirds coalition in both chambers to override one—the White House would remain a decisive actor.

The Supreme Court Took Away One Tariff Tool, Not the Whole Toolbox

Trump’s authority over tariffs is broad, but 2026 has shown that it is not unlimited. In February, the U.S. Supreme Court ruled 6-3 in Learning Resources v. Trump that the International Emergency Economic Powers Act does not authorize the president to impose tariffs. That decision knocked out the emergency-law foundation Trump had used for sweeping duties, including the original 25% tariff on most Canadian and Mexican imports tied to the administration’s drug-trafficking emergency declaration.

The ruling did not erase the rest of the U.S. tariff toolkit. Congress has delegated separate powers under laws such as Section 232 of the Trade Expansion Act, which allows import restrictions after a Commerce Department national-security finding. Trump has used Section 232 for steel, aluminum, vehicles and auto parts, among other products. The administration also invoked Section 122 of the Trade Act after the IEEPA ruling and, in the Canada dispute, turned to Section 338 of the Tariff Act of 1930. That matters for the midterm debate: Democrats could challenge the policy, but changing the underlying statutory authority generally requires legislation. Court defeats can close one door while leaving several others open.

Canada Is Diversifying, but the U.S. Still Dominates Its Export Economy

Canada has made measurable progress in reducing its exposure to the United States, but the numbers still show why decisions in Washington carry outsized weight. Statistics Canada reported that the U.S. share of Canadian merchandise exports fell from 75.9% in 2024 to 71.7% in 2025. Exports to the United States declined 5.8% that year, while exports to countries outside the U.S. rose 17.2%. That was a significant shift, but it still left roughly seven dollars out of every ten in Canadian goods exports heading to the American market.

The diversification trend continued in 2026. In July, Canadian exports to the United States fell 6.6% from June, the steepest monthly percentage drop since April 2025. At the same time, exports to non-U.S. destinations jumped 7.4% to a record $25.6 billion, lifting their share of total Canadian exports to 33.7% for the month. Those figures illustrate both resilience and vulnerability. Canadian exporters are finding alternatives, but replacing the scale, logistics and deeply integrated supply chains of the U.S. market is not something that can happen quickly. That is why a White House-led tariff strategy remains a domestic Canadian economic issue, not merely a foreign-policy dispute.

Autos Show How Quickly White House Trade Policy Can Hit Canada

No sector shows the depth of that integration more clearly than autos. The Canadian government says more than 90% of Canadian-made vehicles and about 60% of Canadian-made auto parts are exported to the United States, supporting roughly 125,000 direct jobs. Since April 2025, Canadian vehicles entering the U.S. have faced a 25% Section 232 tariff on their non-U.S. content when they qualify under CUSMA. Canada responded with its own 25% counter-tariffs on non-CUSMA-compliant U.S. vehicles and on the non-Canadian and non-Mexican content of qualifying U.S. vehicles.

The confrontation escalated further in 2026. In July, Trump invoked Section 338 against Canada, arguing that Ottawa’s auto countermeasures discriminated against U.S. commerce. The proclamation imposed additional duties of up to 50% on specified Canadian products, and later White House actions modified the scope and moved certain products to an import ban effective September 29. Canada, for its part, announced dollar-for-dollar countermeasures covering $27.6 billion in U.S. imports. For assembly plants, parts suppliers and border communities, this is not abstract political theatre. Policy changes can alter the economics of production decisions, sourcing and investment before a new Congress even has time to organize.

CUSMA Is Already Moving Into Another Year of Uncertainty

CUSMA is another reason the midterms will not produce a clean reset. The agreement’s first mandatory joint review took place on July 1, 2026, and the United States declined to renew the deal in its current form. U.S. Trade Representative Jamieson Greer said Washington would keep working with Canada and Mexico on what it considers shortcomings in the agreement. Crucially, non-renewal did not terminate CUSMA. The agreement remains in force, but the parties now move into annual reviews until they reach agreement on renewal or the longer-term termination provisions become relevant.

The process is already rolling forward. On October 2, USTR opened a public consultation for the 2027 joint review, with comments due in January. That timing is important: the next stage of the North American trade fight is being prepared before Americans even vote in the 2026 midterms. A Democratic Congress could influence the debate, especially through committees with jurisdiction over trade, but the administration would still lead U.S. negotiations. Canada therefore faces two political clocks at once—an election calendar in Washington and an annual review cycle that can keep market uncertainty alive well beyond election night.

Canada’s Answer Is to Reduce the Cost of U.S. Dependence

Ottawa’s response has increasingly focused on reducing the cost of being so dependent on one customer. Prime Minister Mark Carney’s government has set a goal of doubling non-U.S. exports over the next decade, an increase it has described as roughly $300 billion. The federal strategy includes new trade negotiations and partnerships, support for businesses hit by tariffs, and infrastructure spending intended to move more Canadian goods through ports and trade corridors. The $5 billion Trade Diversification Corridors Fund is explicitly designed to improve roads, railways, ports, airports and other links needed to reach global markets.

There is evidence that the pivot is beginning to show up in the data. Global Affairs Canada’s 2026 State of Trade material says non-U.S. exports rose strongly in 2025, while Statistics Canada reported record monthly non-U.S. merchandise exports in July 2026. But diversification is a long-term hedge, not an immediate substitute for continental integration. A parts maker in Ontario cannot instantly replace a Michigan customer with one in Germany or Japan without new contracts, transport arrangements and sometimes different product standards. The strategy can make Canada less vulnerable over time, but it does not eliminate the need to manage Trump’s trade policy in the present.

A Democratic Congress Could Put More Brakes on Trump

A Democratic victory could still matter considerably because Congress created many of the authorities presidents now use. Lawmakers have already introduced proposals aimed at reclaiming that power. The bipartisan Trade Review Act proposed that new presidential tariffs expire after 60 days unless Congress approved them. In July 2026, Senate Finance Committee ranking Democrat Ron Wyden introduced a broader Congressional Trade Powers Reform Act that would require congressional approval for new tariffs, reform delegated authorities and increase oversight of the U.S. Trade Representative. Democrats also introduced legislation after the Supreme Court’s IEEPA decision to repeal Section 122, which Trump had used for a temporary import surcharge.

The obstacle is the separation of powers. Even if Democrats controlled both chambers, legislation curbing Trump’s tariff authority would normally have to reach his desk. The president could veto it, and overriding a veto requires two-thirds support in both the House and Senate. That makes bipartisan cooperation especially important. A Democratic Congress could increase scrutiny, shape spending and repeatedly force Republicans to take positions on tariffs. What it could not do automatically is turn the president into a spectator. The balance would shift, but the executive branch would still possess substantial authority unless Congress successfully rewrote the rules.

Canada Has to Plan for Trade Friction Beyond Election Night

For Canada, the safest assumption is therefore that trade friction will remain a live risk through the rest of Trump’s term, regardless of who controls Congress after November. The Bank of Canada has already treated U.S. trade policy as a major economic risk. In its July 2026 outlook, the Bank said Canadian GDP had been roughly unchanged between the first quarter of 2025 and the first quarter of 2026 as the economy adjusted to tariffs, uncertainty and slower population growth. It projected growth of 0.7% in 2026 and 1.8% in both 2027 and 2028, while warning that exports and investment remain on a lower path than before the tariff shock.

There are also signs of adaptation. Businesses told the Bank that fewer U.S. customers were holding back orders because of trade uncertainty, and some companies were changing production, shipping or customs arrangements or diversifying into new industries. That is the context behind McCarthy’s “driving the train” warning. A Democratic midterm victory could add resistance, oversight and bargaining pressure. It could even create a path toward tighter limits on presidential tariff authority. But unless those limits become law, Canada will still be negotiating with an administration whose trade strategy is set by Trump—and planning around a White House that has repeatedly shown it is willing to switch legal tools when one avenue closes.

This Options Discord Chat is The Real Deal

While the internet is scoured with trading chat rooms, many of which even charge upwards of thousands of dollars to join, this smaller options trading discord chatroom is the real deal and actually providing valuable trade setups, education, and community without the noise and spam of the larger more expensive rooms. With a incredibly low-cost monthly fee, Options Trading Club (click here to see their reviews) requires an application to join ensuring that every member is dedicated and serious about taking their trading to the next level. If you are looking for a change in your trading strategies, then click here to apply for a membership.