Eric Ham is based in Washington, D.C. and is a political analyst for CTV News. He’s a bestselling author and former congressional staffer in the U.S. Congress and writes for CTVNews.ca.
After weeks of teasing a potential deal to end the war in Iran, the White House is now boasting an end to the war with a signed agreement. President Trump has confirmed the Memorandum of Understanding (MOU) which is already being roundly criticized for its capitulation by the U.S.
Nevertheless, Prime Minister Mark Carney offered the Commander-in-Chief a lifeline of support, calling the peace deal “a game-changer” even as the deal— described as a “gentleman’s agreement”—is being lambasted by Trump’s own MAGA base.
Still, it is unclear if Carney’s support—in the wake of the American president’s insipid negotiating skills—will be enough to bridge the divide between Washington and Ottawa as they look towards next steps on the Canada-U.S.-Mexico Free Trade Agreement (CUSMA).
The clock is ticking as the July 1 deadline quickly approaches to determine the future of regional agreement. The ink has not even dried on the already deeply unpopular Tehran MOU with the White House wasting no time turning its sights towards its northern neighbour. Even before boarding Air Force One to depart the G7 Summit in France, President Trump made certain his ambitions to exit CUSMA.
Speaking to reporters, he said, "We do better without that agreement.” Also adding, he would rather “leave it unsigned” or “have it terminated.” The agreement— negotiated during the first Trump administration to replace the North American Free Trade Agreement—stays in place unless one of the countries gives six months’ notice that it is pulling out. Canada and Mexico both have indicated they want to keep the trilateral deal in place.
At the time of its signing, Trump called it the best trade agreement ever. The regional trade accord has seen the economic fortunes of all three nations rise exponentially. Moreover, at a time when inflation continues to outpace wages and Canada has entered a technical recession, choking off the flow of goods and services is a sure-fire way to exacerbate stagnant economic growth.
The economic cost of political chaos
Chris Swonger, President & CEO of the Distilled Spirits Council of the United States said in a statement: “USMCA has been a proven success for the U.S. spirits industry, helping support jobs and expand exports by maintaining tariff-free trade with Canada and Mexico. Disrupting that framework would create ripple effects across the North American spirits market, impacting American distillers, farmers and hospitality businesses. We urge President Trump to strengthen the agreement and preserve reciprocal duty-free spirits trade across North America.”
Despite President Trump’s best efforts to pummel the Great White North’s economy through weaponized tariffs, much of Canada’s (and Mexico’s) goods are immune to the import duties unleashed on the rest of the world by the White House. Now, staring down a truculent political base, an anemic economy and a massive failure on Iran, the White House should be frantic to change the narrative.
An extension of CUSMA is just the type of win that will pacify the president’s base, including the business sector. Yet, it remains clear, the American president is equally intransigent and less sanguine about securing the economic future of the nation, much less the region.
As evidence, look no further than the still closed Gordie Howe Bridge. A newly minted multi-billion project connecting Ontario to Michigan, it’s meant to ease congestion and allow for easier transport and flow of billions in goods and services across the two nations. However, this seismic and badly needed engine of progress remains shut down as the Trump administration continues to put up barriers that not only harm a once-close ally but also extracts a heavy price on American businesses and jobs.
Virginia Houston, senior director of government affairs for the American Farm Bureau Federation, said in a statement: “Mexico and Canada are the United States’ largest trading partners, and strong trade agreements like USMCA help bolster the farm economy and keep food more affordable here at home. America’s farmers and ranchers value our trading relationships with our North American neighbors, and we look forward to the discussion around the review of USMCA starting in July. The agreement provides certainty for America’s farmers and our trading partners, and AFBF supports its renewal.”
A bluff the White House can’t afford to call
Such a statement from an institution representing an industry that overwhelmingly supported the president in his bid to reclaim the White House is more affirmation to the positive outcomes the deal continues to reap on the three economies. However, much like the recent Iran deal, Trump appears less interested in securing wins as he is in sowing chaos.
The Business Roundtable, an association of more than 200 chief executives of major U.S. companies, published a report that shows a 50 per cent increase in two-way trade in the region since the deal took effect, with 13 million U.S. jobs supported by trade with Canada and Mexico. Not surprisingly, President Trump continues to double down on rhetoric suggesting the U.S. will walk away from the landmark agreement. Seemingly ignoring the economic malaise caused by his war of choice in Iran, Trump fails to account for his reckless military offensive in the Middle East which ultimately gave Tehran outsized leverage forcing his administration to accept a politically untenable deal.
Yet despite the braggadocio, the desperation was apparent, which is why it is highly likely Trump will eventually cave on his grandiosity and relinquish to an extension of CUSMA. But not before causing tremendous levels of angst and frustration. At a press conference outlining his reasons behind the Iran deal, Trump said: “…rather than having your favorite president be Herbert Hoover, he was always the one I didn’t want to be…I didn’t want to see economic catastrophe. If you kept this going, that could have happened…”
If the war was a glidepath to “economic catastrophe,” walking away from CUSMA will lead to equally calamitous consequences. Perhaps that is why Canada’s prime minister offered a hand of support. Unfortunately, where Trump often remains consistent is in biting the hand that feeds him.
