The Decibel - The future of free trade in North America

Episode Date: April 14, 2026

The deadline to renew the United States-Mexico-Canada Agreement – the agreement that governs free trade in North America, also known as the USMCA – is less than three months away. Canada and Mexico are coming to these trade talks from very different positions: Mexico has been deep in technical discussions for some time, whereas Canada’s talks with the U.S. only resumed over the last few months after stalling out back in October. The Globe’s economics reporter, Mark Rendell, joins us today to break down the different dynamics at play and what to expect leading up to July 1. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The July 1st deadline to renew the United States-Mexico-Canada agreement, also known as the USMCA, is fast approaching. And last week, Jameson Greer, the top trade official for the U.S., signaled that the trilateral trade agreement between the three countries will likely end up having a whole lot of bilateral elements to it. Canada and Mexico are coming to these trade talks from very different positions. And with less than three months to go, a lot is on the line. So today we're talking to Mark Rendell.

He's the Globe's economics reporter. He'll catch us up on where these talks are at and what to make of how each country is approaching negotiations. I'm Cheryl Sutherland and this is the Decibel from the Globe and Mail. Hi Mark, thanks so much for joining me today. Thanks for having me again. So Mark, the USMCA July 1st deadline is coming up. So can you remind us what this deadline actually means?

So on July 1st, Canada, Mexico, and the U.S. have to sit down together and say what they plan to do for this North American free trade pact. So back in 2020 when the USMCA, what we call Kuzma and Canada, came into force, it included this six-year review date. And so six years from when it came into force. And remember, that replaced NAFTA, which came before it. the three countries would have to sit down and decide basically what to do next. So that's what's happening on July 1st. There's a couple of different options. For a long time, the assumption was it would be a pretty routine kind of discussion about

what was working, what wasn't working in the agreement. But of course, Donald Trump has gone and turned the U.S. in a very protectionist direction, slapped a bunch of tariffs on Mexico and Canada, and significantly changed the trading landscape. So these discussions about the USMCA and what's going to happen next have taken on a whole different level of importance. And so what are the paths forward? So when July 1st comes, do we have a sense of what might happen? So there's three options on the table. The three countries can sit down on July 1st and shake each other's hand and say, this is great. Everything's working perfectly. Let's renew the deal for another 16 years. That obviously would be what Canada and Mexico I think

would like to see happen doesn't seem like that's probably what's going to happen. The second option, which is written in the agreement, is if they can't come to an agreement or if there's still, you know, points of tension between the three countries, they can trigger essentially what is a annual review process that happens for 10 years. And at the end of those 10 years, if they haven't come to some sort of agreement, they will exit the agreement or the agreement will end. So option two, again is annual reviews, a kind of slow exit path for 10 years. Negotiations will continue. And then path three is at any point in time, any of the three countries can give six months notice and withdraw from the agreement.

Is it normal for a trade agreement to have a clause like this that mandates a review? It's very unusual. I mean, in the 2018, 2019 negotiations, which created the USMCA, the United States demanded that we have this kind of review added into it. They had felt that NAFTA, which was initially signed in 1994, hadn't gone the way they had wanted, and there wasn't any mechanisms to essentially course correct. So when Trump came in and threatened to withdraw from NAFTA, forced the negotiation of USMCA, one of the big U.S. demands was we would have this review every six years. Now, that injects a lot of uncertainty into the trade agreement. The whole point of a trade agreement is it sets rules that everybody knows, essentially governs how commerce happens between these countries. by putting this review mechanism in, it creates a lot of uncertainty.

So, Mark, the last time we talked to you about these negotiations was at the end of September when the review process started. What do we know about where things stand right now? So the Mexicans in the U.S. have started what they call technical discussions. So the trade team from Mexico City and the trade team from the U.S. are sitting down. They are actively talking through some of the nitty-gritty things that are going to be at the core of the U.S.MCA. So they're talking about things like content rules, how much content in a vehicle or another type of product needs to be sourced within North America to trade tariff-free. They're talking about foreign direct investment, a whole range of issues.

Canada and the U.S. do not seem to have started kind of a formal technical process yet. The Canadian trade team is in place. They have re-engaged with the U.S. over the last month. You probably remember Canada and the U.S. were, you know, through much of last year, there was kind of stop. and start trade talks. In October, there was a lot of discussion around these sectoral tariffs on steel and aluminum. Then that advertisement from Doug Ford about tariffs came in. It really pissed off Donald Trump and he ended the talks.

And there'd be very little communication between the Canadian trade team and the U.S. trade team from October to, call it late February, early March. We now have a new trade negotiator in place. We have a new ambassador in place. they are talking with the U.S. trade representative, Jameson Greer, but it seems to be at a much earlier phase than where the Mexicans are at. They have been engaging with the U.S. much more closely over the past year in recent months. They're into these technical discussions. So there is a sense in which Mexico is on a different path in Canada heading into these talks. And again, we only have about three months until the July 1 date. So a lot of questions about

what the Canadian trade team is doing. This is a simple question here. But what's the difference between formal and informal talks? Because it sounds like Mexico is kind of in the formal part of this process and Canada isn't there yet. I think it's a level of engagement. So Mexico is engaging a lot more with the U.S. They are in a much more technical set of discussions. So their trade lawyers are actively sitting down with U.S. trade lawyers. They're in the nitty gritty, discussing the rules, discussing potential changes to the rules.

There is also much more engagement across a broader range of issues between the U.S. government and Mexican government right now. the Mexicans also seem to have figured out that, you know, these trade negotiations are about a lot more than trade. They're about a reset between the two countries. And so that means, you know, alongside trade, alongside autos, alongside discussion of labor law, that kind of stuff, they're also going to be talking about things like immigration. They're going to be talking about things like drug cartels. And in order to move the trade negotiations forward, they're going to need to show the Trump administration. wins on these range of other non-trade issues. And what about Canada?

Where do we stand right now? From all the reporting I've done, the level of engagement between Canada, the Canadian trade team and the U.S. trade team is quite minimal. Like they are communicating. They have re-engage, but they are not sitting down at any of the same level of detail. The discussions aren't going into the same level of detail as they are with the Mexicans. Now, it's important to remember this is essentially what happened in 2018 as well.

It was a much more formal process, the process that replaced NAFTA with the US MCAs. There were rounds of trade talks. Everybody had both their trade lawyer teams from Ottawa. They had private sector advisories. It was a much more formal environment than this rather loosey-goosey review that we're going through right now. But even then, Mexico and the U.S. continued having a set of discussions. Well, Canada was essentially left on the sidelines.

for a significant period of time, several months and the absolutely crucial part of the 2018 negotiations, Canada just wasn't at the table. At the end, largely on Mexico's demand, Canada was brought back to the table. So, you know, depending on how you see these negotiations, depending on how optimistic or pessimistic you are, you know, some people would say this is like in 2018 where the U.S. and Mexico get into nitty-gritty discussions and then Canada is left on the sidelines and brought back later could be what's happening this time. It's certainly true that there is a very different set of issues that Mexico, city and Washington are dealing with, than Ottawa and Washington are dealing with. So that's at play as well. That's some good historical context there to talk about how things went back then.

And maybe that's something to tell us about how it will go this time around as well. But I'm curious, what does it tell you that Mexico is so much further along than Canada? What does that tell you about the approaches here? So over the last year, Mexico has taken a very different approach to the United States than Ottawa has President Shanebaum. Mexico has cultivated a fairly close relationship with Donald Trump. Mexico is also cooperating with the U.S. across a range of issues that are very core to Trump's priorities. So things like drug cartels, things like illegal migration. There's been a just a level of engagement between the countries.

The U.S. has put a list of basically 50-something. I think it's 54 concerns to the Mexicans and have said you guys should work through that list. Mexico is working down that list. Mexico has put a list of complaints back in the other direction. So there is a level of engagement. It seems like they are approaching it in a more transactional manner. Canada's taken a slightly different approach. The politics in Canada are very different.

Mark Carney was elected on a platform of moving the Canadian economy further away from integration with the United States, trying to diversify trade partners. Carney wrote a wave of kind of Canadian nationalism, an anti-Trump sentiment through to, you know, power. And the level of anger against the U.S. in Canada is very, very high. And so the kind of political constraints on what the Canadian government has been able to do in terms of engaging with the U.S. is different than in Mexico. There's also just, again, a different perhaps economic orientation.

Mexico seems to be leaning into this idea of, Fortress North America, the idea that you will focus on shoring up and integrating with the U.S. in terms of your supply chains, focus on reducing the amount of especially Chinese content, but low-cost Asian content coming into North American supply chains. So Mexico is really making a bet that integration of its manufacturing base into the U.S. is its future. There's no doubt that as it stands, there's much more Chinese penetration into the Mexican economy, this far more Chinese vehicles on Mexican roads, all that kind of stuff. But directionally where they're headed is they have erected tariffs on something like 1400 products from which, from countries they don't have

trade agreements with that includes Chinese electric vehicles. Canada is kind of going in a different economic direction, right? The emphasis is on diversification. Karni is going out and striking deals with countries around the world, including, you know, direct geopolitical rivals to the U.S. like China. We saw that deal with EVs. You know, we have B-O-A-D. coming in, build your dreams. Exactly. I mean, the EV deal is, I mean, that's in many ways you can see the difference in policy orientation of Mexico and Canada in that decision.

At one time, Mexico is trying to reduce Chinese investment into Mexico, trying to, you know, basically match U.S. concerns about shoring up North American supply chains. The same time, the Chinese electric vehicle deal, you know, it's not a huge amount of electric vehicles that are going to be coming in a lower tariff. But Carney also went to China and said, we want Chinese investment into the Canadian auto space. We want Chinese companies to be coming up and setting up, you know, joint ventures with Canadian auto producers. So that is, again, part of what's perhaps happening here or why the Mexicans maybe are dealing better with Washington than Ottawa is, is you have a different set of politics, a different overarching kind of economic

orientation. We'll be right back. So Mark, what can you tell us about Canada's trade negotiators, Mark Wiseman, and Janice Charette? How are they approaching these talks? Yeah, so they were put in place over the last two months to replace Kirsten Hillman, who had been Canada's ambassador to the U.S. and kind of lead on the trade negotiations. Interestingly, they've split the portfolio basically into two. Mark Wiseman, who comes from the world of finance, is a Wall Street guy. He's being put in place, it would seem, to essentially work on the personal relationships.

So to really get close with people in the Trump administration. You know, there's a couple of Wall Street guys in the administration that are very important. Scott Besson at the Treasury Secretary, Howard Lucknick, the Commerce Secretary. These are people that kind of, you know, rolled in the same world, same circles as Mark Wiseman. So he's there to, yeah, work on those personal relationships. Janice Charette, she is the much more technical person. She's been essentially put in charge of the trade negotiations. So she'll be the one who is sitting across from Jameson Greer, who is the U.S.

trade representative, they'll be getting into the nitty-gritty details about these negotiations, about the agreement. You know, she is a career bureaucrat, was clerk of the privy council, so Ottawa's top bureaucrat. She's also being high commissioner to the UK. But she's definitely there. If Mark Wiseman is there to, you know, do the social circuit, you know, wine and dine with the Trump administration, it would seem that Janice Charette is there to sit across from Jameson Greer and, you know, argue about, you know, how much content in a video.

vehicle needs to be from the U.S. or not. So much more technical. So it's interesting. Again, Canada seems to have split the roles in two. Of course, Dominic LeBlanc, he's the minister responsible for it all. So he is the guy in Ottawa who is overseeing all of these things. And he is the one who, again, will be dealing directly with people like Howard Lutnik, Scott Bessent. And then at the end of the day, you know, whatever agreement gets struck, ultimately it's going

come down to Donald Trump. So you can be sure that the Canadian trade team is being supported in the back by Mark Carney and his, you know, whatever direct relationship he has with Donald Trump as well. There was a time when the relationship between the three countries was friendlier, right? They even held a summit called the Three Amigos. But of course, we're not in that boat anymore. And we actually spoke a month ago about the growing relationship between Canada and Mexico. Might these two countries work together? Or, you know, Or is it every amigo for themselves? Yeah, I think it's every amigo for themselves.

I mean, the fact that Mexico City and their economy secretary, Marcelo Ebrard, is, you know, moving ahead with technical discussions with Washington. Well, we are essentially on the sidelines. You know, it suggests they see getting a good deal as their priority. I mean, Mexico has been very clear. It wants a trilateral deal at the end of this. Ottawa has also been very clear. It wants the USMCA to continue as a trilateral deal. But we all know at this point that whether the trilateral deal survives or does not, there is going to be a whole set of bilateral issues that will need to be dealt with.

Mexico is very clearly interested in trying to figure out those bilateral issues and to try to get the best possible deal out of this, perhaps built around the structure of the USMCA. So doubtless Canada and Mexico will be working together. There are a number of issues core to the center of the agreement that kind of trilateral. part, again, things like rules of origin that you can expect Mexico and Ottawa to essentially work together to try to push back against the U.S. But yeah, I think I think you're right. I mean, it is every amigo for himself. Okay. So you mentioned that there are specific bilateral deals that have to be dealt with. Can you give me kind of like a highlight reel of which ones that will be encompassing? Yeah. I mean, it's in many ways it's kind of easy to know what they are because

the U.S. Trade Representative's Office publishes a list every year, which is very helpful of things that it doesn't like about other countries' trade practices. So, you know, many of the things are things we would all be familiar at this point. They don't like how our supply management system works. They would like to see dairy quotas allocated differently. They have complaints about our online streaming act, U.S. liquor being taken off provincial liquor store shelves. So there's those kind of issues that we all know about.

There's other new things on the list like they don't like our sovereign cloud initiative. So that's the attempt in Canada to build up essentially. a cloud computing network that keeps data within Canada, they don't like the buy Canadian push, which is a push at both the federal and provincial levels to focus procurement on, you know, Canadian companies. You know, there's certain really touchy issues, let's say, around language laws. So they don't like some of Quebec's new language laws that have, you know, relate to how streamers have to, you know, show French language content high up or French language labeling. So there's going to be some really dicey issues around the grievances that they're going to push for because once you start talking about things like French language labeling, you start talking about some very core issues around Canadian unity.

So we know what they're going to push for on that front. We also know they're going to push for other things that are more trilateral. And that is, again, things like they're presumably going to want more North American content in a vehicle. So your rules of origin are going to tighten. There's even been suggestions. I've heard from auto guys that they're going to want. They're going to push for, you know, let's call it 50% of a vehicle to be made in the U.S. specifically in order to trade tariff-free.

Have we learned anything about where Canada might actually give some concessions? I mean, Canada has given concessions over the last year. I mean, you'll remember early last summer, they backed down on the digital services tax after Trump threatened to blow up the trade negotiations that were happening at that time. And they have walked back retaliatory tariffs that they put on place on a real estate. range of U.S. industries. So it is clear that, you know, Canada doesn't have the upper hand in this, neither does Mexico. The U.S. holds, to be honest, most of the cards. There are some cards that Canada holds, but the general assumption is that Canada doesn't have a lot of cards that can play

to push back against these requests. I suspect we're going to see some push. There's some areas that are easier to give on than others. Like take dairy quotas, for example, there's this broad perception that, you know, the U.S. is going to blow up supply management. If you actually look at what they're asking for, it's not that extreme. They don't want an end to supply management. They want basically the quotas that Canada agreed to in 2018 to be allocated in a different rail. Right now, we divvy up the quotas in a way that pisses off certain American companies. We've shown, actually, you know, last summer, New Zealand came to us and said, you guys are screwing around with your quota allocation. Please stop doing that. And we did, you know, give some ground on

that. So there is, you know, there's places where you could see some easy wins. I mean, how hard is it for the provinces to put U.S. liquor back on the shelves? But then you get into a really interesting chicken and egg problem because, you know, you have somebody like Doug Ford saying, we're not putting liquor back on the shelves until America removes the tariffs. And then you have the American saying, we're not going to sit down and start talking with you until you put our liquor back on the shelves. So, you know, you can see paths through on things like procurement. You can see paths through where, you know, if both sides approach it in good faith, you could see provincial government starting to essentially remove the restrictions on procurement that's excluding U.S.

companies. But as we also all know, approaching negotiations a good faith isn't necessarily something the Trump administration is known for. Not a good track record there. Not a good track record. There's some tricky things for both the Canadian negotiating team and the Mexican negotiating team to work through. Yeah.

Okay. So it sounds like easy wins, but again, you said tricky, complex. It's still going to be very difficult. There's also going to be some really hard wins. I mean, again, I say they could do something easy with supply management and quota allocation, but we also have a Quebec election coming up in the fall. The party Quebecwa is riding high in the polls. They are very pro-supply management.

Any suggestion coming from Ottawa that supply management could be at risk is going to be a political bombshell in Quebec. You know, last year, the block Quebecwa pushed through a rule in parliament that basically said, Canada can't give up more quota in future trade negotiations and all the parties agreed to that. So there is technical things you can do in how quota is allocated. But, you know, again, political bombshells, political landmines, left, right and center, that Canada's going to have to figure out. So, Mark, we're not quite down to the wire here, but we're getting there. Do we have any indication at this point of what's going to go down on July 1st? Yes, we got a good sense last week, Jameson Greer, who's the U.S. trade representative.

representative, Trump's top trade guy, basically said at a parents, we're not going to all sit down and hold hands and agree to a 16-year extension on July 1st. So he essentially said, we are going to shoot past the July 1st deadline. We are going to continue negotiating. Now, technically, what that means is if we're past July 1st, we're into that 10 years of annual review process. So we will theoretically, on July 2nd, we will be on the exit path out of USMCA. Interesting. Okay. There are lots of opportunities in that 10-year period of these annual reviews in which we can come to some sorts of agreements.

Second really interesting thing he said is, you know, the U.S. believes there are things that are wrong with USMCA. There's things that they don't like about it. But he also said there's a bunch of, quote-unquote, load-bearing pillars of the U.S.MCA, kind of core parts of the agreement that he doesn't want to have to go out and renegotiate. So he said probably what you can expect is core aspects of the USMCA will remain in place. But then he said, you know, there's all sorts of bilateral deals issues we have with the Mexicans, with the Canadians, that we're going to have to deal with separately. And so the way he described it is you're going to have the load-bearing pillars of the USMCA and then quote unquote separate protocols with Canada and Mexico built on top.

They don't really want to crack it open and negotiate it again. And there's actually a really interesting point, which is the, they probably, probably can't really crack it open and negotiate it again. The Trump administration has not sought what is called trade promotion authority from Congress, which is the actual legal authority to go out and make a new technical trade agreement. So there are legal limits to how much they can change the text of the USMCA itself. So what does July 1st mean? I mean, in many ways it probably means nothing. I spoke to probably about 10 trade experts last week before Jameson Greer made his comments. And not a single one thought we would come to some sort of resolution on July 1st, right?

Everybody thinks July 1st is just a date, it's just a line in the sand, we will be past it. The question then is what forcing mechanisms are there to push each of the countries towards some sort of arrangements or agreements? There are political dynamics in the U.S. that could mean we could have some sort of agreements, perhaps between July 1st and November. In November, there's the U.S. midterm election. There's kind of a broadly held assumption that Trump is going to want to be going into the elections with a bunch of quote-unquote wins in his hands.

So you can imagine a world in which, you know, late October, he comes and says, hey, look, we got higher U.S. content in vehicle production or, you know, we convinced the Mexicans to do X, Y, and Z, aren't I great? As we head through the summer and into the fall, affordability issues are also, going to become a bigger concern for the U.S. You know, the Iran War has massively pushed up oil prices that's feeding through to inflation. Some tariff relief could help with some of those inflationary pressures. So, again, heading into the midterm elections, you could see a push towards getting some sort of deal with Mexico and Canada or some set of deals with Mexico

and Canada to try to relieve some of those inflationary pressures. So, Mark, what I'm hearing here is that this is not the last time we're having you on to talk about the USMCA. Oh, definitely not. No, no. I mean, we'll be back probably around July 4th. first, maybe even earlier. But even then, that's probably not the end of the story. We're going to be talking about this. Through the summer, into the fall, heading into the U.S. midterm elections, trade is never settled with Donald Trump. These issues aren't going away anytime soon. So I suspect we'll be talking a lot more USMCA in the coming months. Mark, thanks so much. Appreciate having the show. Thanks for having me.

That was Mark Rendell, the Globe's economics reporter. That's it for today. I'm Cheryl Sutherland. Our associate producer and intern is Emily Conahan. Our producers are Madeline White, Rachel Levy McLaughlin, and Mikhail Stein. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening.