Is there hope for the Canada-United States-Mexico Agreement (CUSMA)? For over a year, Canada-U.S. trade talks have been testy at best, in a deep freeze at worst. U.S. President Donald Trump mocked us as the “51st state,” put tariffs on our steel, aluminum, and autos, and claimed that America doesn’t need anything we’re selling. Prime Minister Mark Carney declared that Canada must reduce its dependence on the U.S., circled the globe inking foreign trade deals, and became the darling of Davos for his vision of “middle power” alliances.
Yet something curious has happened over the past few weeks. Beneath the high-level noise, diplomats and negotiators are taking a different tone. And that is a sign that our countries can maybe — just maybe — find their way forward to a deal.
Signs of Progress in Trade Talks
At a summit last week in Toronto, U.S. Ambassador Pete Hoekstra reiterated Trump’s transactional approach to trade, but with a caveat. “Make us an offer,” he said, but added, “It’s not a threat to Canada, it’s an invitation to partner.” America, Hoekstra argued, needs Canadian potash, energy, and critical minerals. “We want a strong Canada. We think a strong Canada across the board is good for the United States … and it’s probably good for the world.”
Canada’s ambassador to Washington, Mark Wiseman, struck a similarly pragmatic note. America First, he observed, does not necessarily mean America alone. We need to remind Americans that we are far more than hewers of wood and drawers of water, and that a stronger, more self-sufficient Canada is a better customer and a better partner for the U.S. Wiseman also rejected the notion that global diversification and continental integration are mutually exclusive. “We can do both,” he told the assembled business and political leaders.
Carney's Strategic Messaging
That strategy took centre stage a month ago, when Carney addressed the Economic Club of New York and declared that, “Canada strong will help make America great again.” The line rang alarm bells in Canada for its use of MAGA language but was well received in Washington. While to us, it sounds like Canada is saying “we don’t need you, we have other friends,” what Americans hear is: we’ll be wealthier and can buy more of your stuff. That is the key to salvaging CUSMA.
Trump is obsessed with eliminating the U.S. trade deficit. At the summit, former U.S. trade representative Robert Lighthizer argued that decades of trade deficits have caused a $1.4-trillion wealth transfer to the rest of the world. How to reverse this? In Trump’s view, a tariff system that levels the playing field, allowing U.S. industry to compete against state-subsidized manufacturers and countries with cheaper labour costs.
And while China looms largest in this equation, no nation is exempt. Trump constantly carps about the U.S. trade deficit with Canada, even though when you subtract oil exports, America runs a surplus with us. Protectionist policies like supply management are seen as a barrier to U.S. products and a contributor to that imbalance.
