With CUSMA deadline looming, industry leaders see signs of 'a thaw' in frosty Canada-U.S. relationship

Although Prime Minister Mark Carney suggested this week the U.S. has identified about 30 trade irritants with Canada versus about 60 bones to pick with Mexico, Simard said the most contentious bilateral irritants are narrowing.

“I think we have about 10 left,” Simard said, adding “it’s all addressable” by Canada.

Flavio Volpe, head of the Auto Parts Manufacturers Association, said discussions held Tuesday in Washington — which saw Canadian negotiators present a new package of undisclosed proposals to President Donald Trump’s team — were constructive and the interactions with the U.S. trade team showed “more respect than there’s been in past year.”

“I was pleased to see the posture of the talks between the two countries and the progress we’re making on unpacking the issues,” Volpe said in an interview. “I think it’s a departure from where we spent a lot of time in the past year and a half, which was between (the U.S.) making impossible demands and giving (Canada) the silent treatment on responses.”

Volpe said that the president’s social media posts, which this week included a “51st state!” taunt as Trump reposted and amplified a Bloomberg news report on Canada entering a “technical recession” for the first time since 2020, are “not a reflection of the professionalism with which it appears the Americans are approaching the relationship now.”

On paper, time is of the essence.

In little more than three weeks, the Canada-United States-Mexico Agreement (CUSMA) requires the three parties to state whether they will renew the deal for another 16 years, or they wish to engage in annual reviews. Any of the three could also withdraw with six months notice. 

But Simard predicted, as did others, that “the July 1 milestone is something that’s movable and it will be moved. They will go beyond it without having reached a tipping point. Discussions will keep going on.”

Meanwhile Canada is doing the right thing by building up “the capacity to keep being ready all the time for when the moment comes to sit down to negotiate. There will be a call at some point in time. It will come from POTUS (the president of the United States) and you have to be ready.

“And we think more and more that that will happen closer to the November midterm deadline milestone than before.”

The simple fact that Ottawa publicly revealed it presented new proposals to the U.S. is welcome, said Catherine Cobden, Canadian Steel Producers Association, given that it has been so tight-lipped about the state of talks for months.

And Cobden believes that there have been “encouraging signs the U.S. wants to renew,” but she said there are still “big questions” around what “that means they’ll be looking for to commit to that.”

The good news, she said, is that Trump hasn’t said publicly that he wants to rip up the deal he agreed to in 2018, which in 2020 replaced the original North American Free Trade Agreement, or NAFTA.

The representatives of aluminum, steel and auto parts makers all sensed the U.S. is tracking a path toward renewal. They cited positive public comments by the U.S. Trade Rep. Jamieson Greer about the deal having “load-bearing pillars” as a foundation of the economy, even though he consistently states that Tump wants to see changes.

“Both parties sound like they want to be in it, and have unsettled issues,” said Volpe, but said Canada and the U.S. also clearly believe that having bilateral discussions before any trilateral talks is better.

Mexico and Canada formally issued notice Tuesday of their commitment to renew, but no formal notice by the U.S. has been publicly presented.

On Thursday, the prime minister said Canada’s team, Canada-U.S. Trade Minister Dominic LeBlanc and lead negotiator Janice Charette, made “some progress” this week.” 

They met Greer Tuesday in Washington. Afterwards, LeBlanc said he is “eternally optimistic” the trade irritants on both sides can be addressed, and for Canada, he said that includes the U.S. lifting its s. 232 tariffs on steel, aluminum and autos — which the U.S. identifies as “strategic sectors” critical to national security.

And the next day, the Carney government moved to align further with U.S. interests: 

It ordered the federal broadcast regulator to review a decision which could ultimately kill a 15 per cent fee that required major online streaming companies to contribute toward the cost of Canadian media production.

It promised to swiftly legislate stronger rules against forced labour products in Canadian supply chains after the U.S. proposed new s. 301 tariffs against countries that aren’t enforcing bans. (Carney emphasized Canada kept its exemption or “carve-out” from the new tariffs for Canadian exports that comply with the CUSMA.)

And it extended anti-“dumping” quotas that limit cheap foreign imports of steel and aluminum, particularly from China, which the U.S. accuses of flooding markets abroad. Ottawa also extended remissions aimed at easing the counter tariff burden on Canadian importers of U.S. goods in certain sectors, particularly autos, aerospace and health care. 

LeBlanc said Tuesday that “on July 1, as Ambassador Greer himself has said publicly, if there is no consensus amongst the three parties to extend for 16 years, the agreement remains in place for 10 more years, and there’s a series of annual reviews. But all three countries could agree also on a different scenario under renewal after July 1.

“So I think we got to be careful not to set up a cliff that doesn’t exist,” LeBlanc said.