Is North American trade at a ‘breaking point’?
US-Canada tensions rise as USMCA deadline nears
A new skirmish looms in President Donald Trump’s trade wars. The treaty that binds the U.S., Canada and Mexico markets together is up for review, but tensions are rising and could scuttle or undermine the pact.
A “war of words” has pushed review of the U.S.-Mexico-Canada Agreement (USMCA) to the “breaking point,” said Axios. The three countries must decide by July 1 whether to continue the accord for another 16 years, but U.S.-Canada discord stands in the way. Canada has raised U.S. hackles by moving to deepen trade ties with Europe and China in the wake of Trump’s imposition of tariffs last year.
Canada has been “taking advantage of the American economy and people for decades,” an administration spokesperson said to The New York Times. Canadians do not need a “small deal that disadvantages us,” Prime Minister Mark Carney said to CBC News. The treaty’s implosion would have “far-ranging economic effects,” said Axios, affecting the supply and trade of cars, crude oil and natural gas.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
What did the commentators say?
The tense negotiations “reveal how serious the fissures” have become between the U.S. and Canada, Michael Froman said at the Council on Foreign Relations. Trump’s tariffs against America’s northern neighbor have “ushered in a new wave of ‘Canada first’ patriotism” that has been hard on trade, tourism and goodwill between the two countries. But Canada is “condemned by geography” to deal with the U.S., and the U.S. is dealing with rising inflation and gas prices. The treaty should be reaffirmed quickly. The “last thing” the United States needs at the moment is a “major trade crisis.”
Canada “should call Trump’s bluff” on trade talks, Peter Jones said at The Walrus. Ottawa “has more leverage than it thinks” because the U.S. economy is weakening under the weight of the country’s increasing national debt. The United States needs “stuff” that Canada makes, and “our market is an attractive one for American businesses.” Trade has “greatly benefited America.” Canada should remember that at the negotiating table. “We have cards too.”
Trump’s hardball trade tactics are “doing reputational damage” to the U.S. and “undermining the American economy,” Mary Anastasia O’Grady said at The Wall Street Journal. The survival of USMCA is “important for American investors, workers, businesses, farmers and ranchers” and scuttling it is “bound to inflict wounds on lots of American companies.” It will also raise prices on American consumers amid an affordability crisis. “That sounds like a bad political strategy.”
What next?
Expect more “drama” as the USMCA review deadline approaches, said NOTUS. There will be “threats to withdraw, threats to break it up” and “maximal demands” by the United States, said former Commerce official William Alan Reinsch to the outlet.
Experts believe ending the pact is the “least likely option,” said NOTUS. U.S. business leaders are “bracing” for a showdown. There is much at stake: Exports to Mexico and Canada “support millions of domestic jobs generating trillions of dollars.”
