Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Canada has pivoted from defiance to a “Fortress North America” sales pitch to win over US President Donald Trump, who has cut Ottawa from talks over the world’s most valuable trading bloc.
Prime Minister Mark Carney and Ontario’s premier Doug Ford, who have been prominent critics of Trump’s trade policies, are promoting the benefits of regional economic integration ahead of a July 1 deadline to revise the US, Mexico, Canada Agreement (USMCA).
On Monday, Ford heads to Washington to meet US officials “to launch Fortress North America”, which his office describes as “a bold vision for how Canada, the US and Mexico can work together”.
Canada is signalling it wants stronger collaboration with the US, its largest trading partner, and is willing to accept tougher conditions to trade in North America. Ottawa’s previous mantra has been to double non-US trade with new partners in Europe, Asia or Mercosur countries.
While the US has entered into talks with Mexico, Canada remains frozen out since Ottawa’s Ford launched an anti-tariff advertising campaign that upset Trump in October.
Trump issued a barrage of trade actions last week as his administration sought to reimpose new tariffs on trading partners after America’s top court struck down the president’s previous duties.
Carney late last month told Wall Street executives in New York City that “Canada strong will help make America great again” as tensions mount over US plans for USMCA.
The US has about 30 different trade issues with Canada and nearly 60 with Mexico, Carney said.
In April, US commerce secretary Howard Lutnick, who has repeatedly criticised Canada, called the USMCA a “bad deal” that needs to be reworked when new negotiations begin in July.
USMCA covers roughly C$1.3tn (US$132bn) in annual Canada-US trade in goods and services and protects a large swath of Canadian exports from Trump’s tariffs.
After winning an election promising to fight against US hostilities, Carney in early May said “Canada remains open to deeper integration, including options for fortress North America in selected sectors”.
The shift in approach comes as Steve Verheul, Canada’s former chief trade negotiator, told a Senate committee recently that “we could be stuck for a considerable period of time” when it comes to the scheduled review of USMCA.
“Canada is not going to be able to force the US to come to the table,” he said.
Mexico also faces pressure from the US, which is proposing strict new rules aimed at squeezing Chinese parts out of North America’s car market.
Michael Camuñez, a former US assistant secretary of commerce, said Ottawa’s negotiating position was “inherently harder” than Mexico’s.
“Mexico and the US appear to have found a more practical working channel, while Canada is still managing a much frostier political relationship with Washington,” he said.
The White House has criticised Carney for rekindling relations with China and complained about his lauded speech at Davos in Switzerland that described a global rupture due to US policies.
Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, said the USMCA is critical for their industry to compete globally. “Canada needs to get to the table as soon as possible,” he said.
Goldy Hyder, president of the Business Council of Canada, said that despite tensions negotiators are talking behind closed doors. “(We) fully support the government’s approach of proactively identifying opportunities to strengthen the trilateral relationship,” he said.
William Pellerin, international trade lawyer at McMillan, said there appeared “a reasonable path forward” that could see the US drop most of the Section 232 tariffs on Canada’s automotive sector, steel and aluminium. “But getting there will not be smooth,” he said.
Despite Ottawa’s efforts to appeal to Washington, Trump last week posted another of his regular references to Canada as the US’s “51st state!”
On Wednesday, Ottawa announced a reversal of policy that saw an additional 15 per cent tax on US streaming services to produce local content for Canadian audiences.
In June last year, Carney scrapped an unpopular “digital services tax” that targeted US companies such as Meta, Netflix and Amazon in an effort to smooth US relations.
But dropping the tax only led to “a never-ending and ill-defined list of preconditions from the US to start talks”, said Kenneth Frankel, president of the Canadian Council for the Americas.
“It’s very difficult for the Canadian government to shadowbox with that type of regime in DC,” said Stephen de Boer, Canada’s former permanent representative to the World Trade Organization.
Regardless of who Canada’s negotiators talk to, “it all is decided by Trump”, he said.
