US Trade Rep Says Canada’s Retaliatory Tariffs a ‘Problem’ for CUSMA Talks

U.S. Trade Representative Jamieson Greer says Canada’s retaliatory tariffs on the United States are problematic for trade negotiations, as the review of the Canada-United States-Mexico Agreement (CUSMA) approaches in the coming weeks.

Greer told Fox Business on June 9 that there are “a lot of flaws” in CUSMA that have led to a deficit with both Canada and Mexico over the years, and that the United States is focused on fixing those issues.

The United States is engaging Canada and Mexico separately on a bilateral basis, he said, adding that a team is conducting formal trade negotiations with Mexico.

The two sides are discussing ways to “improve the rules” to ensure goods moving between the United States and Mexico are made in either country and to prevent Mexico from serving as a “third-country hub” for countries such as China seeking tariff-free access to North America through CUSMA, he added.

“We would expect the same for Canada when we are able to get to some kind of an arrangement with them,” Greer said.

“Right now, they have a different approach to the United States. They have some retaliatory tariffs still in effect and that makes it a problem for us to negotiate.”

Canada removed most of its retaliatory tariffs on U.S. goods under CUSMA last fall to revive stalled trade talks between the two nations, but sectoral tariffs on steel, aluminum, and automotive products remain in place in response to the U.S. administration’s tariffs on those sectors.

Canada-U.S. Trade Minister Dominic LeBlanc met with Greer on June 2 and said the meeting was “positive,” while noting “turbulence” in the discussions. He said he  made “specific proposals” to the Americans, but did not elaborate.

LeBlanc did not announce any upcoming formal talks with the U.S. side, and said issues are being addressed. Ottawa has urged Washington to remove U.S. tariffs on Canadian goods and Canada formally told the United States and Mexico last week that it wants to renew CUSMA for 16 years.

Hours ahead of LeBlanc’s meeting with Greer last week, Prime Minister Mark Carney said the United States has identified 30 “technical” trade issues with Canada, while Mexico faces about 60 such issues.

Speaking to reporters on June 2, Carney said Canada is “making progress” on a few of those issues, adding that the most significant concerns for Canada involve industries subject to U.S. sectoral tariffs, such as steel, aluminum, autos, and forestry products.

“So we’re trying to find a new partnership with the United States in the strategic sectors,” Carney said in French.

Greer said in late May that it’s “hard to see” where Canada’s current trade approach to the United States will end given the U.S. administration’s intention to maintain some tariffs.

Canada’s retaliatory tariffs are the most recent source of friction Greer has pointed to in explaining why talks with Canada have progressed more slowly than those with Mexico.

He has previously cited a range of trade irritants, including provincial bans on U.S. alcohol products, Ottawa’s “Buy Canadian” policies, Canada’s supply management system, digital regulations, and its “strategic partnership” with Beijing, including an agreement to reduce tariffs on Chinese electric vehicle imports.

Ontario Premier Doug Ford concluded a two-day visit to Washington on June 9 and said he promoted the renewal of CUSMA under a “Building Fortress North America” framework that would strengthen the continent’s prosperity and security.

His proposal calls for closer cooperation on critical minerals, manufacturing, energy, defence, and Arctic security, while reducing North America’s reliance on China for strategic industries such as electric vehicles, semiconductors, batteries, and artificial intelligence.

“Let’s get a deal done. Let’s create more jobs, more opportunities, more investment for both sides of the border,” Ford told reporters in Washington on June 9. “If we get this deal done, both economies are going to boom.”

CUSMA replaced the North American Free Trade Agreement and came into force on July 1, 2020. The agreement includes a joint review every six years, with the upcoming review set to officially begin on July 1, when the three nations will decide on a path forward.

The parties may choose to extend the agreement for a set period, while failing to reach a long-term update could trigger annual reviews. Any of the three countries could also opt to withdraw from the pact.

Noé Chartier and Paul Rowan Brian contributed to this report.