U.S. President Donald Trump is once again dangling the threat of withdrawing from his country’s free trade deal with Canada and Mexico, even though his trade officials are in talks on renewing it.
Speaking in the Oval Office on Wednesday, Trump said he is “not looking to renew” the Canada-U.S.-Mexico Agreement (CUSMA) when it comes up for a review on July 1, six years after it took effect.
While the agreement doesn’t actually expire until 2036, any country can withdraw from it by giving six months’ notice.
Trump signed the deal — known as USMCA south of the border — during his first term as president.
“USMCA did one thing that I loved. After six years, it comes up for renewal. I don’t know that I’m going to renew it,” he said Wednesday.
He went on to repeat his long-held complaints that the U.S. doesn’t need anything from Canada or Mexico.
“It was a great deal for one reason: it gave the right to terminate,” Trump said. “It was very important that we be able to do that. So we’re talking to them. We’ll see if we do something.”
CUSMA is crucial to the Canadian economy because it covers some $1.3 trillion in cross-border trade with the U.S. and shields roughly 90 per cent of Canada’s exports from Trump’s tariffs.
When Trump signed the deal in 2018, he boasted of it as “the most modern, up-to-date, and balanced trade agreement in the history of our country.”
Canada, Mexico want deal renewed
The text of CUSMA offers each country the opportunity to extend the agreement for another 16 years or launch a series of annual reviews.
Canada and Mexico both formally declared they want the deal extended but have also said they’re prepared to negotiate improvements. Trump’s top trade official, Jamieson Greer, has not made the U.S. position public.
However, the U.S. has already begun formal negotiations with Mexico about renewal and has scheduled two more rounds of talks next week and in late July.
Separately from the Mexico talks, Canada-U.S. Trade Minister Dominic LeBlanc and Canada’s chief negotiator Janice Charette met with Greer and his team in Washington last week.
While LeBlanc didn’t provide details, he said Canada put proposals on the table to address what he called “long-standing issues that the United States has raised with us.”
U.S. President Donald Trump has floated the possibility that he won’t renew CUSMA, a trade deal between his country, Canada and Mexico. The deal is up for review on July 1.
There was no immediate reaction from the Carney government to Trump’s latest comments.
If the U.S. does not agree to renew CUSMA as part of the July 1 review, the agreement continues to remain in force while the three countries negotiate changes.
A key goal for Canada in the talks is to get relief from Trump’s tariffs on steel, aluminum, automobiles and softwood lumber.
However, Greer has repeatedly signalled that tariffs are something that all countries, including Canada, will have to live with as a price of access to the U.S. market.
Trump’s comments on Wednesday came just as lawmakers on Capitol Hill and leaders of the U.S. agriculture industry were praising the trade deal.
During a hearing of the House committee on agriculture, speaker after speaker urged the administration to extend CUSMA and warned against scrapping it.
The trade agreement has been “extremely beneficial not only to our U.S. farmers, ranchers, foresters and agri-businesses, but also to U.S. consumers and the economy as a whole,” said Glenn Thompson, the committee’s Republican chairman.
Jamie Beyer, a farmer and executive member of the American Soybean Association, told the hearing that her sector — the single biggest U.S. export crop — supports a full renewal.
Trade deal ‘critical’ for U.S. soybean farmers
“USMCA is critical for the U.S. soybean sector and should be continued without creating disruptions or additional uncertainty,” Beyer told the hearing.
In Canada, trade experts were parsing Trump’s words to try to figure out his next move.
If Trump merely means he won’t extend the agreement for another 16 years, then Canada doesn’t have much to worry about, says William Pellerin, an international trade lawyer with McMillan LLP in Ottawa.
“Fundamentally, there are 10 years left to this trade agreement unless the U.S. president triggers the escape clause,” Pellerin told CBC News Network on Wednesday.
Pellerin said it’s no surprise that Trump would threaten “the nuclear option” of withdrawing from the trade deal because his way of negotiating has always been to talk tough in public.
As Canada and Mexico push for a CUSMA renewal, Canada-U.S. Trade Minister Dominic LeBlanc said ‘I feel better’ about negotiations after Tuesday’s meeting with U.S. Trade Representative Jamieson Greer. LeBlanc said he’s confident ‘we’ll get to a better place than we’re in right now with these sectoral tariffs because it’s in the economic interest of the United States.’
Mark Warner, a Canadian and U.S. international trade lawyer at MAAW Law in Toronto, is also cautioning against overreacting.
“Trump likes to up the ante and get people riled as part of a negotiating tactic,” Warner told CBC News.
Warner pointed out that Trump did not actually threaten to withdraw from CUSMA, which would have far more dramatic consequences for the deal than simply not renewing it.
“That’s probably all that Trump was saying today, that we’re going to end up with annual reviews, and I think that’s pretty much where everyone has thought we were going to land,” Warner said.
Prime Minister Mark Carney held a virtual meeting with the premiers on Wednesday that happened to take place after Trump spoke in the Oval Office.
At a later news conference at the Ontario Legislature with visiting Pennsylvania Gov. Josh Shapiro, Premier Doug Ford was asked whether the prime minister had expressed concern about Trump’s comments during his meeting with premiers.
“Not necessarily,” Ford said. “We’ve heard these comments from President Trump in the past. We need to stay focused.”
More Stories
Canada ‘open for business,’ Hodgson tells international energy conference
Bank of Canada keeps key interest rate at 2.25% as it tries to balance competing economic risks
Carney says Gordie Howe bridge will open this week, White House maintains Trump’s opposition ‘has not changed’