Trump did not assure any concessions regarding tariffs during recent discussions with Canada. Carney noted that the conversation was respectful, maintaining Canada’s sovereignty in both private and public remarks.
The possibility of new trade talks involving Canada, the US, and Mexico remains uncertain, with Canada expressing a preference for Mexico’s inclusion. Carney confirmed that he plans to meet with Trump in the future, emphasising that Canada’s agricultural supply management will not be negotiable in any discussions with the US.
Ongoing Trade Negotiation Challenges
This excerpt reflects ongoing uncertainty in North American trade negotiations. The lack of concessions on tariffs signals that no immediate progress was made. In maintaining a firm stance on sovereignty and supply management, Carney sent a message that certain domestic policies are not up for debate, regardless of broader economic pressures. From our view, this means that no change in direction is likely in the short term and any movement tied to these negotiations will remain constrained by political assurance.
Without a clearly set path for trilateral discussions, and with Canada favouring a North American dialogue to include Mexico, it’s reasonable to anticipate that efforts to rekindle broader talks will meet delays. That preference makes it harder to move quickly on bilateral terms, leaving key sectors—particularly those touching farming and logistics—on hold. For derivative markets, this sort of gridlock adds friction. Timing becomes trickier, and the usual signals less certain.
We have to treat tariff-related outcomes, and anything tied to supply-managed goods, as low-confidence variables. That means cutting exposure to short-dated instruments that rely on changes in trade terms. Instead, there’s merit in scanning for secondary effects: adjustments in freight movement, currency buffers priced into CAD pairs, and implied volatility bumps tied to irregular policy headlines. Those give hints before prices move.
Managing Market Reactions Strategically
What Carney did reinforce was clarity around non-negotiables. That tightens the range of possible outcomes. By locking down supply management from the start, he essentially narrows our working corridor. That reduces tail-end swings on related contracts—think dairy-linked import pricing and derivatives tied to cross-border transport. The baseline hardened this week.
As for anything USD-CAD-related, spot spreads and vol time decay have held steady, despite policy noise. That reinforces a view we’ve operated under: it’s not the meetings but the outcomes that move hedging costs. Until something shifts on that front, long gamma positions look set to erode quickly. Better to conserve premium and stay closer to delta-neutral, especially if positions extend into late month.
Over the next few weeks, we can’t expect sharp direction from policy lines alone. Instead, we should watch for informal remarks by trade delegates, early draft proposals leaked via non-official channels, and MP commentary tying agricultural steady-state principles to broader economic priorities. Those offer tradable events, albeit brief ones.
In this type of policy stalemate, it’s easy to overestimate headline weight. What matters more is pacing. Slower dialogue stretches the planning window but dulls edge in most front-month directional trades. Our strategy turns from chase to carry: harvest where premiums sit above realised, especially in soft commodities and FX-linked synthetics that use CAD legs. It’s not flashy, but it pays when everyone else waits.
