Prime Minister Justin Trudeau said Friday that Canada is “ready” for a likely renegotiation of the Canada-United States-Mexico Agreement (CUSMA) after Donald Trump vowed to reopen the free trade deal if he returns to the White House.
Trump told the Detroit Economic Club on Thursday that he will invoke the six-year review clause under the agreement and seek new protections for the American auto industry from Chinese interests. U.S. Vice-President Kamala Harris, who’s running against Trump in November’s election, has also said she intends to review the pact.
Speaking to reporters in Laos at the end of this week’s ASEAN Summit, Trudeau said his government will continue to defend Canadian workers and industries as it did during the tense negotiations with the first Trump administration that led to CUSMA, often referred to as the “new NAFTA.”
“We’ve been here before,” Trudeau said.
He said Canada has “bucked the trend” of countries turning away from international free trade deals toward more protectionist and “insular” economic strategies by successfully negotiating agreements with Europe and Asian partners, as well as CUSMA.
“We did it by standing up for Canadian jobs, by demonstrating how integrated, in the case of the United States, our economies already are. We’re ready to do it again if necessary.”
CUSMA, known as the USMCA in the U.S., replaced the decades-old North American Free Trade Agreement (NAFTA) when it came into force in 2020 — putting it up for review in 2026. All three countries will have to confirm in writing if they wish to extend or renegotiate the agreement.
During his speech in Detroit, Trump announced that “upon taking office, I will formally inform Mexico and Canada of my intention to invoke the six-year renegotiation provisions of the USMCA that I put in.”
“Oh, I’m going to have a lot of fun,” he added.
Get daily National news
Get the day’s top news, political, economic, and current affairs headlines, delivered to your inbox once a day.
Much of Trump’s speech was focused on the U.S. auto industry, which is largely based in Detroit. He suggested he wants to add new clauses to CUSMA that will stop Chinese auto companies from building plants in Mexico and benefitting from Mexico’s access to the U.S. vehicle market.
CUSMA’s rules of origin clause requires higher levels of North American parts in vehicles sold in the three countries compared with NAFTA, which Trump said China is also trying to exploit.
“I’ll also seek strong new protections against transshipment, so that China and other countries cannot smuggle their products into the United States tax-free through Mexico to the detriment of our workers and our supply chains,” Trump said.
“They smuggle this stuff in. They don’t pay anything. We’re going to have very strong language on that.”
Chinese automaker BYD has become a top vehicle supplier to Mexico and is reportedly planning to build its next auto plant in the country, although Bloomberg reported the company is waiting until after the U.S. election to make a final decision.
Trump vowed to impose “whatever tariffs are required” to keep Chinese auto plants out of Mexico — even suggesting levies as high as 1,000 per cent on those companies.
“I don’t want to see them,” he said.
Trump didn’t mention any grievances he has with Canada during his speech. But Canada, which briefly faced U.S. tariffs on steel and aluminum during the NAFTA negotiations, is bracing for Trump’s vow of across-the-board tariffs on all foreign imports between 10 and 20 per cent — an act that economists say could throw Canada into a recession.
Harris promises CUSMA review
Harris has blamed CUSMA, which she calls “Trump’s trade deal,” for a loss of U.S. manufacturing jobs during Trump’s presidency. She has also pointed to the United Auto Workers union’s claim that Stellantis, a top auto manufacturer, is seeking to move some production from the U.S. to Canada — a claim Stellantis has denied — which Harris said was made “far too easy” through CUSMA.
Harris, who was one of just 10 U.S. senators who voted against CUSMA, said in a statement last month that she would reopen the agreement as president.
“Many who voted for this deal conditioned their support on a review process, which, as president, I will use,” she wrote.
Although Harris said she “knew it was not sufficient to protect our country and its workers” when she voted against CUSMA in 2020, she said at the time that her decision was based on “insufficient” environmental provisions.
The offices of Canada’s chief economist and U.S. trade representative have both said CUSMA has had a positive impact on their countries’ respective economies, particularly in the automotive sector.
Kimberly Clausing, an economist and senior fellow at the Peterson Institute for International Economics, told Global News that while both Trump and Harris are making big claims about CUSMA on the campaign trail, they may think twice upon taking office.
“If you’re going to expend political capital to do international economic things, you should try to be more bold and do things with more substance, rather than tinkering with an agreement that’s basically working,” she said.
Clausing also echoed Trudeau’s point that CUSMA drew strong bipartisan support at the time, despite Harris’s opposition.
“I don’t think there’s anything that’s happened in the time since that would really make one rethink that,” Clausing said.
© 2024 Global News, a division of Corus Entertainment Inc.