CUSMA CRISIS Trump Cuts Canada Out as U S –Mexico Trade Talks Begin! - Episode #150

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The United States has made a shocking move in trade talks, cutting Canada out of negotiations with Mexico. This sudden decision has left many wondering what prompted the US to make such a drastic change. With the US and Mexico working together to potentially reform the North American Free Trade Agreement, Canada's exclusion has significant implications for the country's economy. What does this mean for the future of trade between the US, Mexico, and Canada?

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Transcript

SPEAKER_01 0:08

Good morning. Thanks for joining us on Saturday, May 30th, 2026. Canada may be facing one of the most serious trade shocks in years. Prime Minister Carney this past week was down in New York giving a speech before a business group luncheon. The United States and Mexico have begun formal talks on the future of Cuzma, also known as USMCA. But Canada is not part of those discussions. They're not even at the table right now, and they haven't been at the table with the United States for months. This is a huge development because Cuzma is supposed to be a three-country trade agreement between Canada, United States, and Mexico. Instead, the United States and Mexico are moving ahead first, while Canada is left on the sidelines. For Canadian workers, manufacturers, farmers, auto plant workers, steel producers, aluminum workers, and exporters, this raises major questions. Is Canada being sidelined on purpose? Is Trump trying to pressure Kearney into concessions? Or is this just hardball negotiations before the July 1st review deadline by the United States? Well now we're going to listen to the Prime Minister a portion of his speech that he gave them in New York and we'll hear the important point that he made to those people in the room and the Trump administration.

SPEAKER_00 1:14

Above all, uh as you would expect, uh we're focused on things that are good for Canada. This is good for all Canadians, but it's also good for the United States because a stronger Canada is a better ally. And we know we know that uh while Canada and the United States have had our differences over the centuries, we have always worked and eventually work through them because we share values and our common interest.

SPEAKER_01 1:45

As you can hear from Prime Minister Carney, this not just uh any old speech that he's giving before the forum. He's trying to communicate to the United States business leaders and the Trump administration that Canada is a reliable U.S. partner and will also build new trade relationships not only with the United States but with Europe and Asia. Now we all know that the Canada sends about 80% of its exports to the United States, making the Kuzma Agreement pivotal for Canada's economy. Reuters has reported, and I've told you this before, that the Kuzma Agreement is shielding a major part of Canadian exports right now. If the Kuzma deal falls apart, it will make an unstable economy now more unstable. And the Bank of Canada has also warned that the Kuzma deal, the failure of Kuzma, could lead to multiple possible outcomes with major economic consequences. This is not just a trade story. The Kuzma US FCA talks are entering the high risk phase before July 1st review date. Under the agreement, there is a review clause. Canada, the United States, and Mexico must decide whether they're extending the agreement, moving it to an annual review, or just canceling the agreement. Yes, they've had phone calls, Minister LeBlanc has had discussions, everybody's had discussions, people are down there talking to individuals, but they haven't formally sat down with pen and paper to negotiate the Kuzma Agreement. This is the biggest headline. That the U.S. has begun that process and is moving forward with Mexico. While Canada appears to be not even that we're sidelined, we're not even in play. Reuters reports the U.S. in this article here and Mexico have set thro set three rounds of trade talks, formal trade talks, beginning in Mexico City, with further rounds in Washington in June and Mexico in July, has not yet been included in those rounds or invited at all. Here's another article from Reuters regarding Jameson Greer. He's the lead negotiator for the United States. The U.S. trade representative says that Washington still has significant issues with Canada. One thing he has said last week, this past week, sorry, is that the tariffs on steel, aluminum, wood, and the auto industry, those will not be going. The sectoral tariffs, those will be are not to be negotiated. They're going to stay in place. A deal without tariffs is not going to happen. He was pretty clear on that. The U.S. side is focused on rules of origin. Remember the last episode I did, I had us all focused on that new verbiage from Jamison Greer, where he indicated that there'll be strict rules regarding the origin of the product. And that's because of our negotiations here in Canada with Europe, China. They don't want Canada being a backdoor into the U.S. market. Industrial policy is another issue that they have, significant issue. The auto industry, that's a big one. Steel, aluminum, subsidies from Canada, subsidizing the industry. But as I've told you before, we're subsidizing everything. We're subsidizing the aviation industry, the auto industry, the steel industry, the aluminum and wood, the soft wood. We're subsidizing all our industries because if we don't, they won't survive. If they don't survive, there's no jobs. What it sees as Canada, this is the US, as Canada's retaliation against the United States, those subsidies is what they have a beef with. Jameson Greer also signaled that tariffs on Canada and Mexico may remain even under a revamped, renegotiated Cuzma agreement or framework. So this whole thing about a trilateral agreement and bilateral agreement, I've been talking about this for a while in my episodes. I've already said that the President of the United States does not like trilateral agreements. He likes one-on-one agreements between the United States and another entity. Canada's position, and continues to be our position, is that the deal should remain Kuzma, remain a trilateral agreement, not split into US-Mexico and US-Canada agreements or bilateral agreements. Canada and Mexico have both emphasized the importance of keeping the agreement as a trilateral agreement for North America framework. But the United States is not in favor of that. It has already started negotiating separately with Mexico. Talks are raising concerns within Canada that the United States will reach a deal with Mexico and leave Canada on the sidelines. Now, this whole bilateral thing that's going on with Mexico, this could be just a ploy by the U.S. administration and President Trump to put pressure on Canada for concessions because they still have a lot of grievances with us regarding trade and our ability to subsidize different industries, which the United States believes, and in some way, rightly so, that there's an unfair advantage to their industries down in the States. They see Canada as not just a partner but a very um big competitor in the market. Prime Minister Kearney going down to New York and giving a speech in that business forum was, you know, he's described that everything that the United States has done regarding trade is quote unquote a rupture. And what he was trying to do by going down there this week was trying to reset the Canadian-US relationship while also reducing dependence on the United States market. In New York, Prime Minister Kearney called for a renewed US-Canada partnership in areas like auto, aluminum, energy, critical, minerals by stating that we are stronger together than being apart, while also warning that global trade is going through a major change and that we should be working together to be stronger together. And like he said in that little clip that I played you, make the America great again. And that rang through the administration, business leaders, and a lot of the pundits were talking about what Prime Minister Carney had said regarding that any United States would be stronger together. But still, the United States is moving forward with its bilateral negotiations with Mexico. Since the United States started to negotiate with Mexico separately, and there's uh already a formal schedule as to those negotiations with Mexico and the United States regarding Kuzma, the Canadian dollar has fallen to a uh six-week low. And that has caught the eye of the Bank of Canada. Again, more uncertainty. And that prompted Prime Minister Kearney, I think, to take some action and go down to New York and speak to business leaders and send a message to just to them and the Trump administration that Canada is ready to work with the United States to make both Canada and the United States stronger. Whether that message is getting through them, I don't know. And maybe it is employed to sort of put pressure on Canada for concessions in Kuzma because we have not been sitting down with U.S. officials to negotiate or even start negotiating with Kuzma on the Kuzma Agreement, regardless of what the Minister LeBlanc and everybody else in the Carney administration has been saying. Yes, they've been talking over the phone, yes, they've been having lunch, yes, they've been going down there and having separate meetings, but there's been no formal negotiations on Kuzma. One of the industries that are going to get really hit or affected by the Kuzma negotiations is the auto industry, because they're being shielded right now by the Kuzma agreement that's in place. And we've talked about that in the past. Washington wants tougher North American content rules regarding the auto industry, U.S. made inputs in vehicles and industrial goods. That continues to hit the Canadian auto sector hard. If the United States pushes hard for tighter regional rules and rules regarding origin of parts. And that is something that Jamison Greer has been talking about over and over again, that there is going to be rules in the new agreement regarding origin of the product. Because as I said, the United States does not want Canada being used by other countries as a backdoor into the United States and getting around their agreements with those countries like China, like Europe. So I'm sure Prime Minister Carney and his administration are aware of this and are concerned about it, but I'm not seeing any sign of that. I just this past week the foreign minister from Canada was in China talking to her counterpart. Um there's more news on China on the airways and in the media. And soon we'll have those 49,000 Chinese EVs landing in Canada. So I don't see anything that Prime Minister Carney is doing to sort of quell any of those concerns that the United States has. In fact, I think he's he's setting aside this uh speech that he gave down in New York. He really hasn't done anything, um, at least in the open. He he may be doing something behind the scenes, but he's sort of sitting and waiting and waiting for the United States to come to him. And he may be waiting a long time. Yes, there are his officials are talking to their counterparts in the United States, but we have no idea how that's going. And from what I've been hearing and seeing, it ain't going well because they're in no hurry to sit down with us. And if they make a deal with Mexico before they make a deal with us, as I said in my first, very first video regarding Cuzma, that will be very bad for Canada. I want to clarify one important point that we should take away here in this video is that the July 1st deadline, it's an important date, but it's not necessarily the final date. The bottom line is this if all three countries that are signed up on the Cuzma Agreement agree to renew the agreement, it will renew for 16 years. Now, all it takes is one country to abstain from that renewal and it will revert to an annual review. So every year it will be reviewed. And then the worst case scenario is if somebody pulls out of the agreement. Well, if you're cutting a separate deal with Mexico, why have the trilateral agreement? Just keep that in mind. But that's what the July 1st deadline, why it's so important. We're gonna know where everything's headed in July. So one of the things we haven't talked about yet, and my uh final thoughts here and my takeaway is that we haven't talked about these digital rules or or laws that Canada is trying to implement here in Canada. That is a big grievance for the United States. And if you can recall, the Prime Minister did drop the digital policy as a concession, and here we are doing it again or threatening to do it. And the U.S. uh appears to be using tariffs, the threat of creating a bilateral agreement with Mexico and the sectoral tariffs to pressure and leverage any game against Canada. Canada is trying to defend its market access while avoiding a rush to make a deal with the United States and talking to other countries to work on separate deals to move away from its reliance on the United States. But there's been a lot of things going on that the Canadian government's doing that I don't think it's being perceived very well down in the States, and that's going to make those negotiations harder. Remember that Canada is being sidelined, but Canada, as Jamison Greer said before Congress, is that Canada is the only country in the world that still is retaliating against the United States. It's the only country. And yes, we have, as per the Prime Minister, we have the best deal in the world. But if we don't have a deal at all, that will be a big problem. And we need to get to the table fast. And I'm still not a big fan of Minister LeBlanc. Uh, you know, sometimes it's it's a personality thing. If they don't, if they can't communicate because of their personalities, it doesn't matter what we say or do, there'll never be a deal. So I've been I've been saying that Prime Minister Carney needs to change the lineup, change the team. He's taking steps, but I still think that Minister LeBlanc should be one of those people that should be changed up. Because obviously the coach of the team, it's not working. And when the team's not winning, you need to change the coach. And I think Minister LeBla is the coach of our trade in the team, and we're still not getting anywhere. In fact, I would say it's gotten worse because we're not even at the table. We're the biggest partner, really. If you compare us to Mexico, we should be at the table already, but we're not. And we have to get the prime minister to go down there to convince people that we should be at the table. Good luck. But we'll see how this all unfolds because every day is going by, we're getting close to that July 1st date, and right now it's not looking good. Let me know your comments, your thoughts on this issue, and I will reply as you know. And I think it's an important story. I just wanted to give you an update as to where this all stands leading into July 1st. Hey everyone, if you enjoy these news summaries that I put out every week and you find them informative, please be sure to subscribe and give me a thumbs up. It really helps the channel. You can also catch all my episodes on my podcast up here. And you can find my podcast and YouTube music. Thanks for watching. Be safe, and we'll see you on the next one.