There was a suggestion today suggesting that President Trump will formally “withdraw” from the Canada/Mexico/United States free trade pact (CUSMA/USMCA) tomorrow (Happy Canada Day!). However, unless he radically breaks the rules (always possible), this is just moving the situation towards annual reviews with a potential dissolution in 10 years.
This was already expected to happen, as this gives more negotiating space for the Americans to try to aggressively ram terms down the Canadian negotiation teams’ throats. That said, the Canadian Federal Government is not exactly in a mood for giving ground to the Americans, and the economic outlook for the Americans going into midterm elections is hardly great, and a renewed trade war might not be welcome outside of the White House.
It is possible that the Canadians could offer some concessions, but considering that Canadians are boycotting American goods, it is not clear how much concessions allowing greater access to Canadian consumers matters. The main industry at stake is automotive, with the American major manufacturers having sprawling supply chains that criss-cross the borders. However, those manufacturers are looking more and more to be dinosaurs that missed the boat on electric vehicles, which reduces the salience of the industry on a forward-looking basis.
It is unclear to me how much more damage Trump can inflict on the Canadian economy. The Supreme Court limited his ability to impose tariffs via social media post, so a sudden stop to trade appears less likely. The trade talks will be a source of negative headlines, but the global economic outlook is more important at this time.
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