Who's anxious about a Canada-U.S. trade deal? That depends who you ask

Canada, not so much.

Even before Canada-U.S. trade minister Dominic LeBlanc chatted with U.S. Trade Representative Jamieson Greer for about 30 minutes on Friday afternoon, Trump’s top trade official threw cold water on any prospect of negotiations restarting, suggesting a deal with Canada is as elusive as ever.

President Donald Trump is satisfied with the stalemate with Canada, Greer told CNBC, because America is “getting what we need” from Canada — an apparent contradiction of Trump’s repeated claims that the U.S. does not “need” anything from Canada.

Greer said there is a “lot of other trade with Canada. You know we’re still getting what we need from them in terms of oil, gas, potash, all of these things. We’re shipping (agricultural products) back and forth across the border,” he continued. “So, there’s still a lot of strong trade between the two countries. We’re comfortable with where we are.”

There are effectively no U.S. tariffs currently on Canadian oil, gas or potash, and Canada’s Liberal government under Mark Carney has rejected calls to leverage Canada’s resource assets, saying the notion of imposing export taxes or throttling energy or fertilizer exports to the U.S. would risk Canada’s reputation as a reliable supplier.

On Friday, Greer shrugged off tensions that saw Ottawa break off trade talks on Aug. 21 over what Carney said were unacceptable U.S. demands encroaching on Canadian sovereignty over language and culture, and its ability to independently set trade policy and do deals with other countries.

The collapse of talks — the second major rupture in negotiations in a year after last fall’s blow-up over Ontario’s anti-tariff ad campaign during the World Series — triggered a new round of tit-for-tat tariffs and counter-tariffs between Canada and the United States, Trump’s retaliatory order to federal agencies to change the name Lake Ontario to Lake America, and a renewed “governor” taunt toward Carney.

Carney has signalled he’s moved on, is focused on strengthening multilateralism, and doesn’t much care about the daily back and forth with Trump. The prime minister says he remains in touch with the U.S. president, and that he can “compartmentalize” the trade dispute and still discuss geopolitical issues.

LeBlanc also remains in casual contact with Greer, but made clear Canada is not comfortable with the state of trade relations, adding the United States has imposed “illegal and unjustified tariffs on sectors of our economy that are causing considerable hardship to workers and businesses across the country.”

At the same time, Leblanc emphasized, “we’re also not going to sign a deal that’s bad for Canada.” 

Hinting that in the coming weeks the Carney government would announce a new round of “major projects of national interest,” LeBlanc said it will “continue to pursue plan A, which is controlling what we can control, building strength at home, diversifying those trading relationships, and working with the United States to try and find a deal that will be in the interests of Canadian workers that will protect Canada’s sovereignty,” which he suggested is plan B. 

A senior government official confirmed Friday that indeed, nothing had changed after LeBlanc and Greer spoke.

Canada, LeBlanc said, is not “desperate to get an arrangement at any cost.” 

However, Greer portrayed Canada as the party that is eager for a deal.

The Canadians “periodically, they come, and they want to have a deal. When they do, we talk. As we saw before, we gave them a deal. They left. They call us now and then, and we have good conversations about potential deals. But,” Greer added, “no urgency on our side.”

Greer said Trump’s trade policy, including up to 50 per cent levies on steel, aluminum, autos and other products, is a “global policy. It applies to Canada, China, the U.K., Brazil, all kinds of countries.” And, Greer claimed, it is working to increase U.S. steel and auto production already.

He told CNBC that the U.S. advanced trade with China during this week’s visit with President Xi Jinping, and would release details on Monday of the list of a “subset of goods” that the U.S. “can trade with the Chinese on a more preferential basis.” Greer listed agricultural products, medical devices, consumer goods and “other things that are nonsensitive. And we’ve actually reached agreement with the Chinese on a number of these.”

Greer also suggested talks with Mexico are advancing.

Mexican President Claudia Sheinbaum told reporters she believes the U.S. has an “intention” to reach a bilateral agreement before its midterm elections, but she also said talks are not yet at a final stage.

“We’re making progress,” Sheinbaum said Friday.

“Our goal is to reduce tariffs on steel and automobiles and eliminate other tariffs, and that’s the discussion we’re having right now. They’ve raised several issues. We’ve made progress on some. Others depend on our sovereignty — and, of course, we won’t yield on those because they involve sovereignty, territorial integrity, and our constitution — and everything must fall within the framework of the trade agreement. So, of course we’re interested in economic integration, but always with sovereignty.”

Both Sheinbaum and Greer alluded to the growth of electronics manufacturing in Mexico. Sheinbaum said it is overtaking autos as one of Mexico’s main exports to the U.S., while Greer flagged that it is part of the reason “our deficit with Mexico is growing … we don’t like that trend.”

He said the shift in electronics supply chains with some manufacturing moving to Mexico, shows that “people are getting the message that the supply chains need to get into the United States or as close as possible.”