President Trump hints at potential expiration of CUSMA
In a recent development, President Donald Trump has expressed openness to allowing the Canada-United States-Mexico Agreement (CUSMA) to expire next year, rather than negotiating a new deal. This statement comes as the agreement, which Trump played a pivotal role in negotiating in 2018, is up for review. Known as CUSMA in Canada and USMCA in the United States, the deal is set to be evaluated next year.
During a White House briefing, Trump stated, 'It expires in about a year, and we’ll either let it expire, or we’ll maybe work out another deal with Mexico and Canada.' This revelation has sparked curiosity and speculation among stakeholders.
Trump's comments also touched on the perceived exploitation of the U.S. by Canada and Mexico, suggesting that the U.S. has been 'taken advantage of' by its trading partners. However, he quickly added that this was a common issue with many countries, not specifically blaming Canada and Mexico.
The USMCA, which Trump hailed as 'the best agreement we’ve ever made' at the time of its signing, is now subject to a formal review process. This review, as outlined in Article 34.7 of CUSMA, involves all three countries agreeing on whether to extend the agreement for another 16 years, with a joint review scheduled no later than six years from now.
The U.S. Trade Representative, Jamieson Greer, has indicated that Trump is considering various options, including walking away from the deal or negotiating separate agreements with Canada and Mexico. Greer also suggested that the free trade agreement might be split into two parts, one for each country, citing differences in the labor market, manufacturing, and trade profiles.
The U.S. has been providing tariff relief for Canadian exports compliant with CUSMA since March, and a recent RBC report highlighted the critical role of CUSMA exemptions in mitigating the impact of Trump's tariffs on both the Canadian economy and U.S. manufacturers and importers.
As the formal review of CUSMA progresses, with public hearings ongoing and Industry Minister Melanie Joly set to appear before the House of Commons international trade committee, the future of this significant trade agreement remains uncertain.
