The CUSMA review deadline is here. What now?

0:01If you sold somebody a loaded gun who you knew was in a vulnerable state and they shot themselves, I think it is murder. Just because you're using the internet doesn't mean you get away with murder. I'm Damon Fairless, host of Hunting Warhead. This season, I take you inside the business of suicide and the places desperate people go when they can't find what they need in the real world. Hunting the Suicide Salesman. Available now wherever you get your podcasts.

0:34This is a CBC Podcast. Hey, everyone. Hey, Paul. Happy Canada Day. Peter, happy Canada Day. For Canada Day, I snuck in and stole Katie's keys to the podcast studio. Quick quiz. How old are we, guys? I mean, not to you. Me? Not you. Not you. The nation.

0:51Willy Lowry:I went to 26th and 1867. carry the seven divided by two. Well, how old are we, Willie? Well, my quick Google search, cause I couldn't do the math. 159, 159. Not bad. That's, that's, that's a solid record. Full disclosure. We're taping this episode on Tuesday, the day before Canada's day, which is the day before NHL free agency. No. Oh, wait a second. It's the day before Kuzma renews, news, the deadline we've been talking breathlessly about forever a year now. And there is an argument to be made that Canadians perhaps care more about NHL free agency than Kuzma. But Kuzma is, of course, very important.

1:36This is the trilateral trade deal, which is, of course, up for mandatory review this year. And while Canada and Mexico would like to extend the agreement for 16 more years. Look, it's so unclear what's going to happen here. I don't know what Trump's going to do. Nobody does. And the joy of this is we're in like a little time capsule. Everybody listening to this probably has a better sense of what Trump's going to do than we will. Will it be this much talked about blow by of a deadline? We don't know yet. And we are very thankful to have you, CBC senior business correspondent, Peter Armstrong, here in D.C.

2:12with us to explain everything. Clearly, you did not get the dress code memo. I'm going to loosen my tie. There you go. There we go. Just for you. I feel better now. I feel better already.

2:24Willy Lowry:Gosh, we've set the bar very low for this episode. And with the impact of a trade war set off by Trump's tariffs still being felt, there's a lot at stake for everyone in truth. So on this week's episode, we're asking what happens after the July 1st Kuzma deadline. I'm Paul Hunter. I'm Peter Armstrong. And I'm Willie Lowry. We're CBC's Washington Correspondence, two blocks from the White House.

2:56Willy Lowry:All right, Willie, as you're saying, we're lucky enough to have Peter here, who's an expert in all things cross-border trade. So, of course, I'm going to throw the first question your way. Only natural. Only natural. So we've got the deadline. Before we get to that and all the sort of fallout, potential fallout from this July 1st deadline, where are we at right now? What is the – I'll leave it to you to explain to everyone the current state of the talks. Lucky me. I think in one of our earliest podcasts, we described the relationship between the US and Canada as complicated. I think that could be, again, used to characterize the current talks.

3:33But here's what's important. They're actually happening, right? And there was a period in time where they weren't. So Dominic Leblanc, of course, our Canada U.S. trade minister, has met multiple times just in the month of June with Jameson Greer, the U.S. trade rep. They met on June 2nd and again on June 16th on the sidelines of the G7 in France. And they've also held some technical talks. All of that bodes, if not well, certainly better than where we were at several months ago.

4:08Willy Lowry:We had the comments from Pete Hoekstra. the U.S. ambassador to Canada the other day, saying things are nowhere near the finish line. But I found it interesting what Mark Carney said. I think it was last week. What I have seen with the president is that you're not close to make a deal, and then you make a deal. I've seen that in different cases. It doesn't mean the deals are good deals, but it means being prepared, having done the work, knowing what you want.

4:39Willy Lowry:so both things can be true i was hosting cross-country checkup on cbc radio on the weekend and one of our guests was aaron o'toole the former conservative uh party of canada leader and who's also now in mark carney's advisory committee when it comes to this and and he said i think he put it rightly when he said trump is the wild card right and even carney was i think talking about how it's going to ultimately, ultimately, obviously, but this is at the point where it takes the two leaders to sign off on something at this point. But by calling him a wild card, that underlines all of it, right? Because as we've said so many times on this podcast and in any of our coverage, you just don't know what Donald Trump, right?

5:19Willy Lowry:And he's so mercurial. Aaron O'Toole was saying that, you know, there are times when it seems like he understands the value of the US-Canada trade relationship, and then the next day, he's derisive about it. The next day, sometimes it's the same breath. Sometimes it's the same breath. No, exactly. And that's the complicated part, to use that word again. For sure. And he keeps his own administration on their toes. They often don't know which way he's going to land on any given decision. But this review has inspired months of breathless coverage. What do people need to understand about what happens after July 1st, this July 1st Kuzma deadline?

5:55I think this is really important. And I don't, I'm not entirely sure how much this has been absorbed in the conversation, but July 1st is going to come and it's going to go and nobody expects there to be a deal. And you know what happens to Kuzma or USMCA or free trade? Nothing. Nothing. It just keeps rolling on.

6:13Willy Lowry:Is that podcast over? Pretty much, right? And I think it's like the deal will expire on July 1st of 2036. And it's really important to recognize that what this is, Like I went through the actual text of USMCA to find what are we talking about here? How is this governed? And this is why you're here. This is why I've come down is to try to get my head around what is actually happening. What matters? The rest of the podcast is Peter Armstrong. Yeah, I'm just going to read the entire text. 2 ,000 pages of USMCA coming to you fully. But it says, as part of this six-year review, if the parties don't confirm they wish to extend the term of the agreement for another 16 years, the commission shall meet to conduct a joint review every year for the remainder of the term of the agreement.

6:58That's it. That is the sentence that governs everything that we've been talking about leading up to this. And in a way, it sort of ends all of that and moves us into the next chapter, which is trying to figure out what we're actually going to do, because the deadline is going to come and the deadline is going to go. It's not going to change the deal. But isn't there a consequence in the sense of

7:18Willy Lowry:uncertainty? Oh, enormous. Or any organization or company in any industry that wants to plan, make long-term decisions that affect everything that it does is effectively on pause. Like nobody knows where this is going to end up for all that stretch of time. You're right, I think. I think everybody – like in a sense, nothing changes, but that's sort of the problem, isn't it? And does that hurt Canada the most? It probably hurts Canada the most. It might hurt Mexico almost as much. But don't lose sight of the fact that it hurts America as well. And one of the things I'm trying to do while I'm down here is speak to American businesses about how much this is hurting them.

7:54This uncertainty, like if you were a company and you needed to buy a new fleet of trucks or you needed to invest in a new warehouse, whether you're in Mexico, Canada or the U.S. And if your business is trilateral and moving across like a lot of businesses are, are you really going to build that thing now or buy all those trucks now? Is now the time or would you go to your board and say, you know what, let's just hold on. Let's just wait and see how this plays out. Maybe things are going to change a little bit for the better. Maybe they'll change for the worse. But let's wait and see. And so that waiting and seeing is having very real impacts, as well as the cost of the tariffs.

8:30I mean, the auto industry is spending$2 billion or$3 billion a year on aluminum tariffs alone, right? So all of that uncertainty, all of that hit.

8:40Willy Lowry:Welcome to Ask Me Anything on Kuzma with the CBC's Peter Armstrong. Just to wind up to it. Can I ask one of those? Ask me anything? I just, I wonder if, you know, you talk about the business perspective, you know, taking a pause, waiting to see what approach to take. Is that not perhaps the kind of approach that either the Carney government or the Mexican government is going to try and take to all of this? There's only two more years of Trump. Or is that too long a time? I think that's probably the businesses tell me that's too long of a time. The businesses I talk to say they still believe there will be a deal.

9:19And if you look at what Trump has said and you look at what Greer has said and you look at what every on not every, but almost every business that spoke to the USTR hearings about the state of USMCA here in America told the government, we want this deal to be extended. They want to have some add-ons to it. You know, Janice Charette, the Canadian negotiator, has talked about them as like little Lego pieces that you can tack on to the existing agreement. But like Jameson Greer, I got a quote here where he talked about those Lego pieces and said, you know, they would be layered on top of the existing USMCA, what he called the load-bearing pillars of USMCA.

9:58And he said, they work out okay. And if we get rid of them, then I just have to go back and do it all over again. This agreement that I was reading from is 2 ,000 pages long. It governs$2 trillion in trade every year, and it has been a success. Much as Donald Trump likes to yell about it, the trilateral trade is up 37 % since the USMCA went into effect in 2020.

10:18Willy Lowry:I was going to ask you to read some more of the trade agreement, but I'm just going to hold that. Listen, I can't. I've got sections highlighted. I'm good to go. You raised the name Janice Charette, smarter than anybody at this table. She's Canada's chief trade negotiator to the United States. She has talked about all of the stuff that we've just been talking about here. Let's play a clip. Here's what she said back in April. There's a lot of focus on July 1st, which is kind of a checkpoint. It's not a cliff. It's not determinative of the future of our trading relationship. the USMCA, the trading agreement does remain in place.

10:50I don't think we should expect, and Jameson Greer has said this, that necessarily we're going to have everything resolved with a bow ready to go by July the 1st.

10:59Willy Lowry:And yet we're all kind of freaked out about it all. Should we be or should we not? I guess that's the ultimate question because we've been, you're right. I mean, how many headlines, how many newscasts, radio, everything has been said, here it comes and here we are. And so? And so it will continue. And I think the point that Willie was making earlier is these talks have been ongoing. We know they've been talking to one another. We know they had the framework of a deal pretty much worked out last fall. And then that blew up, maybe because of that Doug Ford, Ronald Reagan ad, maybe because the auto industry.

11:35It's hard to tell exactly what happened on that front, but it blew up. But the underlying fact of that was that they had the broad sense of what they needed to sort of talk about. You know, the options now are pretty clear. When Donald Trump was coming home from the G7, he said in one sentence, right? Paul, you were talking about how one day to the next he contradicts himself. Here it was, he got off the plane, and it was Josh Wingrove from Bloomberg, Canadian himself, was asking questions that I've been trying to get a sense from. How long do you hope USMCA negotiations or reviews go on? Well, it's not something that's, to me, I think it's better without it.

12:16I mean, to be honest with you, I'm not a big fan of it. I liked it because it got us out of NAFTA. We do better without an agreement. Do you want to just leave it enrolling? I would rather leave it unsigned. I'd rather have it terminated I would rather not have the agreement but I may sign it but we'd do better as a country if we don't have an agreement

12:40Willy Lowry:Can I just say that in a nutshell is also covering Donald Trump what is he saying there? I don't think anybody understands The great thing that I think Josh did in that was say, you say that but this is what will actually happen and it was the first time in a year that there's been that level of detail in an exchange on this file that a lot of people that have been covering trade have been clamoring for. But I still don't know where Trump landed on that. Well, he landed in two places. He said, I would like to terminate it, which is the closest he's come to saying the U.S. would withdraw. But he didn't.

13:12But he didn't say it. And think of all the things that he has said about Canada, about Canadian sovereignty, about using economic force to take over the country. The one thing he hasn't come out and said is, I intend to withdraw from this agreement. But then he also said, maybe I'll sign it. Maybe that works out.

13:37I am an actor, fresh out of theater school with big dreams and an even bigger drug habit. But things are pretty good. That is, until my best friend is set up on a date with David Lee Roth. Yeah, from Van Halen. If you know, you know. From CBC's Personally, this is Discount Dave and the Fix, The true-ish story about how a fake rock star led me to a real trial that held up a mirror to me. And okay, let's just say that not everyone in this story is who you think they are. Personally, discount Dave and the Fix. Available now on CBC Listen or wherever you get your podcasts. So we just heard that. You know, I don't like the agreement.

14:18I would rather leave it. Can we just listen to Trump when he actually signed the agreement? Let's go back in time.

14:23Willy Lowry:Today, we're finally ending the NAFTA nightmare and signing into law the brand new U.S.-Mexico-Canada agreement. Very special. Very, very special. The USMCA is the largest, fairest, most balanced and modern trade agreement ever achieved. There's never been anything like it. Other countries are now looking at it. This is a colossal victory for our farmers, ranchers, energy workers, factory workers and American workers in all 50 states. The USMCA. So what happened in the years since he said that? Well, I'll tell you what happened in those six years since 2020 trade, trilateral trade between Canada, U.S.

15:09and Mexico is up 37 percent. We're now at$1.99 trillion worth of trilateral trade moving in and out of Canada, the U.S., and Mexico,$380 billion in regional foreign direct investment. By any measure, by every measure, the USMCA has been an enormous success for Canadian businesses, for Mexican businesses, but primarily for American businesses. Scott Linscombe from the Cato Institute wrote a piece in Bloomberg leading up to this. And one of the quotes that will rattle around my brain for as long as this takes to get sorted out is the agreement is simply too important to blow up and Trump knows it.

15:45Willy Lowry:Does he? He must. He must. And yet here we are. This is the thing. What does Trump want? He wants a stronger economy. He wants American jobs. That's what he repeatedly says is behind all of this. Bring the jobs in any of the sectors to America. Make Americans richer, to twist his phrase a little bit. And yet here he is advocating. You talk to lawmakers on Capitol Hill. They're all pro-USMCA Kuzma. It's like Trump is the outlier on this. And yet they're afraid to stand up to him and say, well, no, we need this. It's almost as though Kuzma goes against Trump's America first agenda, but fulfills his MAGA agenda, which is make America great again.

16:30This, for all intents and purposes, is a trade union that has been beneficial to the U.S., as you just alluded to. Yet, optically speaking, it kind of can be co-opted, I guess you could say, to look perhaps as though it's not America first because it is aiding and benefiting not just the U.S., but Canada and Mexico too.

16:54Willy Lowry:Do we know the answer to whether Trump can simply rip it up or does he need congressional? approval. We don't know. We don't know, I think is the answer. And I think if ever it happened, it would go to the Supreme Court and they would have to decide, which is one of the reasons they want to do this as a side deal. They want these, we've talked about, the Americans talk about protocols, the Canadians talk about side letters. There might be a couple of side letters. There might be one global agreement. And they want to, as Jenna Charet frames it, is they want to have these like Lego pieces that they can attach on to what Jameson Greer calls the load bearing pillars of USMCA, the stuff they do agree with.

17:30And I think it's important to just underline that. There are vast chunks of this 2 ,000-page document that even Trump and even Jameson Greer are like, yeah, yeah, that's good. Are those pillars made out of steel? Well, I think, look, that takes us to what do they actually want? And I think that's what's sort of hovering around this conversation. And if you go through it, and you go through it with even the Great Lakes governors, the stuff they want, once you get through the noise, most people agree on. They want better rules of origin, rules around stuff coming in from Mexico. What's an American part?

18:05What is Canadian steel? They want better, more clear rules around that. And frankly, I talked to the steel industry in Canada. They're not opposed to that. They want to get that done. It's how they've gone about it and the threats and the vitriol and the tariffs and everything else that have made it so fraught. But it also roots it back down to what is the actual deal that's in place here. And for all of the uncertainty that this has caused, what has built up is this pent up money that's sitting on the sideline waiting to be unleashed. And as soon as there is some kind of a deal, it doesn't even have to be a perfect deal, maybe a little bit of tariffs, maybe like whatever this ends up looking like is going to unleash a quite significant amount of investment into Canada, Mexico, and the United States.

18:53The kind of stimulus that Donald Trump is looking to get from the Federal Reserve in terms of interest rate cuts might come by signing an agreement on USMCA 2.0 that allows that money to unleash itself back into the North American economy.

19:08Willy Lowry:So can we guess where this ends up? The tariffs on steel and the other sectors, they might come down a smidge. Carney said he's not going to sign a bad deal. He could have signed bad deal a year ago or yesterday, not into signing a bad deal, but that these other ones, they're around for the long haul, are they not? Is that the conventional wisdom? Because there is a general consensus, at least within the US, within the administration, that the tariffs are kind of here to stay. That's my understanding. And increasingly, I'm hearing an acceptance of that in the business community. That's some level.

19:43But I think the parameters of a deal, if you kind of squint into the lens, you can start to see it taking shape. I think the bigger question is when will this happen? And a lot of people have been saying the lead up to this, to this deadline, for lack of a better word, has been a chapter. Now that we're past it, we're into a new chapter that will allow for different kinds of conversations. And then there's all these other deadlines. You've got the Section 122 tariffs, which is the 10 % global tariff on everything, Kuzma exempt, of course. But that expires on July 24th. So there are new things that are coming in the road ahead that they're going to have to deal with.

20:20And some of them are going to be political. Some of them are going to be economic.