U.S. not renewing trade agreement with Canada and Mexico in ‘current form’

The United States Trade Representative Jamieson Greer says the U.S. is not renewing the Canada-U.S.-Mexico Agreement “in its current form” — but the trade agreement will remain in place as negotiations continue.

“The United States will continue to engage with Mexico and Canada to address the Agreement’s shortcomings and our trade deficits with these countries,” Greer said in a statement Wednesday.

“However, the Agreement remains in force pending resolution of these issues or until the Agreement’s termination.” 

This decision triggers a rolling annual review for up to a decade, at which point it will expire if an extension isn’t agreed upon.

Greer had a virtual meeting with Canada-U.S. Trade Minister Dominic LeBlanc and Mexico Secretary of Economy Marcelo Ebrard earlier Wednesday to discuss the trade pact’s future. It was the deadline for all three partners in the pact, better known as CUSMA, to indicate whether they wanted the deal renewed.

Canada and Mexico previously said they were looking for a 16-year extension.

“We agreed on the importance of continuing our discussions and identifying ways to ensure trade and investment frameworks between Canada, the United States and Mexico continue to support North American prosperity and competitiveness,” LeBlanc said in a statement. 

“For Canada, this includes substantive discussions with the United States on addressing sectoral tariffs on Canadian steel, aluminum, autos and lumber.”

In a video in Spanish posted on social media, Ebrard said Mexico is not in a hurry but the country also does not want the uncertainty of prolonged annual reviews.

The trade agreement has shielded Canada and Mexico from many of U.S. President Donald Trump’s tariffs. Both countries are being slammed by Trump’s separate sectoral tariffs on industries like steel, aluminum, automobiles and cabinetry. 

CUSMA was negotiated during the first Trump administration to replace the North American Free Trade Agreement. The sometimes tumultuous negotiations served as an early test of Ottawa’s approach to the Trump administration but ultimately all three countries hailed the agreement as a success.

But Trump has continued to cast doubt on CUSMA’s future since his return to the White House and his embrace of a sweeping tariff campaign. He has called the agreement “irrelevant” and has said it may have served its purpose.

CUSMA remains in place unless one of the partner countries gives six months’ notice that it is pulling out. It’s unclear whether the Trump administration can take that action without the approval of Congress.

Trade negotiations between Mexico and the United States have launched but Ottawa and Washington have not started official talks yet.

Conservative trade critic Shuv Majumdar posted on social media that “millions of Canadians are out of work, anxious for their future, living in uncertainty around how to price things, plan things, and grow businesses.”

“Yet still Canada isn’t at the table?” Majumdar said.

LeBlanc said Canada is approaching the trade discussions “from a position of strength and with the goal of preserving and strengthening one of the most successful trading relationships in the world.”

“At a time of global economic uncertainty, Canada is a stable, reliable and trusted partner,” he said. “We have the energy and natural resources the world needs, a world-class workforce, and a predictable business environment attracting the highest investment in decades.”   

Carlo Dade, director of international policy and the New North America Initiative at the University of Calgary’s School of Public Policy, said the blown deadline doesn’t mean much to the future of CUSMA “as long as there is constructive work and dialogue occurring.”

“I think the market is adjusting to a new normal of uncertainty with the U.S.,” Dade said in an email. “That said, awareness of the reality also means greater awareness of the cost.”

Dade said some members of the Trump administration have indicated that the U.S. still values the trade agreement. 

Greer has said there are “pillars” of the continental trade pact that work well. Commerce Secretary Howard Lutnick and senior Trump adviser Peter Navarro have been much more critical.

“Trump is negotiating in public, so we have to discount, heavily discount, what he says, view it through the lens of his seeking leverage,” Dade said.

Andrew Hale, a fellow at Advancing American Freedom — a conservative advocacy group founded by former U.S. vice-president Mike Pence — said CUSMA was a major achievement during the first Trump administration and he credits former United States trade representative Robert Lighthizer for following the law while being a tough negotiator.

Trump’s trade actions are now sowing “chaos” and many people in the administration “don’t get Canada,” Hale said.

“They’re so unpredictable and it’s so chaotic. If I knew what their strategy was, I could make a gold mine. It’s like asking me if I have a crystal ball.”

While trade talks will continue, the uncertainty discourages long-term investment because of the deep integration among all three countries, Hale added. If negotiations continue for a long time, he said, it could diminish North America’s global competitiveness.

Annual consultations could also bring increased trade frictions, Hale said, because they “are never usually harmonious with the Trump administration.”

“They push people right to the edge of the cliff every time they have these negotiations,” he said.