This US-Canada trade agreement renegotiation is both about the reindustrialization strategy and about the CCP’s march towards global hegemony in industrial manufacturing and every other industry for that matter.
In short, they asked too much and offered too little.
—Canadian Prime Minister, Mark Carney
On a summer afternoon last Friday, the Canadians pulled out of a trade negotiation that seemed to be tracking well. President Trump’s additional tariff threat, which was a tool to get the Canadians to the table and deal with a litany of trade irritants, had gone to hell in a handbasket after the Canadians read the details of the text and US Commerce Secretary Howard Lutnick supposedly added new demands on autos. At this point nobody knows because the government won’t release the details of the deal. Canadians were already tired of being called the 51st state.
In the presser, Prime Minister Mark Carney later said, “We cannot accept what they have offered, and we will not give what they have asked.” Point taken but Canada’s future is at stake. The world has changed significantly since the signing of CUSMA, which the President touted as the gold standard.
But then the weekend happened and by Monday at a press conference the Premier of Ontario, Doug Ford said, “The President can kiss my ass”. In retaliation, President Trump signed an executive order to change the name of Lake Ontario to Lake of America.
Ok, can we move on please?
As anyone who has read my columns knows, this trade agreement renegotiation is both about the reindustrialization strategy and about the CCP’s march towards global hegemony in industrial manufacturing and every other industry for that matter. The Americans have been fighting back and are winning in some ways. But how do we get to a deal where the Canadians and the Americans respect each other’s national interests while allying to take on their biggest threat?
But Canada does not want to be told who and why we can trade with anyone, let alone by the Americans. This can be achieved through a trade agreement providing all live by its provisions.
In response to the apparent breakdown Miles Yu (Professor, United States Naval Academy), who crafted much of the US/China policy at the State Department in Trump 1, posted on LinkedIn on Thursday: “Canada and Mexico are violating the spirit—and potentially the letter—of USMCA by enabling China to penetrate North American supply chains and circumvent U.S. trade barriers. USMCA is a binding treaty, not a suggestion. Especially, its Rules of Origin and Labor Value Content provisions were designed precisely to prevent this kind of backdoor access.
“Carney calls closer economic integration with China a matter of Canadian sovereignty. Sovereignty, however, does not mean freedom to ignore treaty obligations while exporting the consequences to American workers and industry. If Canada and Mexico want the benefits of USMCA, they must enforce its rules—and shut China’s back door into the U.S. market.”
I believe that the chief negotiator, Jaimeson Greer (US) and Dominic LeBlanc want to craft a win-win deal but both sides are dug in. The China origin and economic subversion discussion has taken place between both sides, but neither will directly acknowledged it. According to the Americans, there is proof that both Canada and Mexico are breaking “Rules of Origin” provisions within USMCA.
In 2026, America’s continental economic security requires solidarity. The US has been pushing for limits on deals with their biggest adversary in order to defend the domestic auto-manufacturing and every other industry in North America. The notion that Canada is moonlighting by allowing Chinese EVs into the domestic Canadian market is the key stumbling block and for Canada we need our independence to choose who we trade with.
Why this is a bad strategy we just need to look at the Germans and their trade deficit with their biggest trading partner China. But also read the conclusion of Six Months of Germany’s New China Strategy: Old Ways Die Hard by Jamestown if you want to understand how today’s German leaders can’t address the problem they know they have.
We need a mutually beneficial agreement, right? And Canada wants to maintain its sovereignty. Canada has a lot of leverage with the Americans in our mining and oil and gas industries. America is dependent on Canadian oil for a significant portion of current refining production (4.1 million BPD). According to US petroleum Institute, those inputs support 21% of U.S. gasoline consumption and about 42% of U.S. transportation diesel. The point is obvious, the US needs Canada far more than the President is willing to admit.
As for Beijing, energy diversification is less about choosing friends than preserving options. Canada has become an increasingly significant supplier since the expansion of the Transmountain pipeline. One third of all oil exports through British Columbia now go to China. China’s strategy is clearly focused on the need for reliable energy supply chains that contribute to its state objectives, which is to reduce the ability of any single supplier, route or geopolitical crisis to constraint China’s freedom of action.
Hence, Canada should be using its critical resources as leverage to partner with the US and trade with China because geography matters.
The Liberal government has laid out an ambitious resource and major projects strategy that will require US and European capital and customers in those markets. This will create a destiny we can control while not becoming subservient to the hegemonic ambitions of China or the Untied States. But we must choose ethics, human rights within a profitable path that serves Canadian interests.
From the American point of view, it is not about trading with China but rather about the composition of that trade. The Chinese state has been using Mexico and Canada to advance its industrial strategy and to circumvent sanctions and tariffs on Chinese products. Our PM must show leadership by not kowtowing to the Canada China Business Council, which effectively is operating as part of China’s United Front. Their goal is to promote win-win, but as history shows China is the only real winner.
I would be remiss if I didn’t include this quote from author Charles Burton (The Beaver and the Dragon) from his Globe and Mail Column on Thursday, “In the current hostile landscape, Canada could find itself deeply regretting coming out of the American frying pan and into a Chinese fire.”
* Dean Baxendale is Columnist, Author and CEO of Optimum Publishing International.
