Inside the collapse of the Canada-US trade deal

[border_humper]

https://archive.is/2026.05.05-134827/https://www.politico.com/news/2026/05/05/inside-collapse-canada-us-trade-deal-00905837

Behind the scenes, the North American auto sector was growing frustrated about being left out of the agreement. Tensions escalated after Carney’s Liberal government threatened Detroit automakers and raised the cost of importing vehicles into Canada, eroding the goodwill from that Oval Office meeting.

During the discussion, Carney brought up the Keystone XL pipeline, which would transport oil from northern Alberta to the U.S. Midwest. “They almost jumped across the table to embrace their Canadian counterparts,” said Hoekstra. “They were thrilled.”
While he’s not part of the negotiating team, Hoekstra said there were discussions on aluminum, talks on uranium — “because both countries are firmly committed to nuclear”— and an agreement on steel, “which would have been a big benefit to the auto industry on both sides of the border.”
The deal would have introduced tariff-rate quotas on steel, permitting a fixed volume to enter at lower tariffs before higher duties applied beyond that threshold, according to an official familiar with the Canada–U.S. trade talks. The individual, like others interviewed for this story, was granted anonymity to speak candidly about the negotiations.

While the public fallout over the ad made headlines, it was finer policy details out of Ottawa — particularly around autos — that alarmed Detroit.
On Oct. 15, the day after Ford announced the anti-tariff ad, Canada’s industry minister wrote to Stellantis chief executive officer Antonio Filosa threatening to sue the company over its decision to move its Jeep production plant from Brampton, Ontario, to Belvidere, Illinois.
After the companies announced plans to cut jobs or scale back vehicle production in Ontario, Joly also threatened to claw back millions the government of Canada had doled out to Stellantis and GM.
Detroit automakers continue to be squeezed by tariffs from both sides of the border. Like steel and aluminum, vehicles that are assembled in Canada are subject to U.S. Section 232 tariffs when they head south.
At the same time, Canada has imposed retaliatory tariffs on U.S.-made vehicles, as well as steel and aluminum. To prevent major disruptions in the auto sector, Ottawa created a system to refund those duties to U.S. automakers so that they could still import vehicles and stock dealerships across Canada — but only if they maintain jobs, production and investment in Canada.
On Oct. 23, Finance Minister François-Philippe Champagne and Joly reduced how many vehicles Stellantis and GM could import tariff-free, effectively raising their costs.
That evening, Trump abruptly halted “all trade negotiations” with Canada. While the president blamed the high-profile Reagan ad for the collapse in talks, one official familiar with talks between auto executives and White House officials, claimed the ad was largely “a pretext.”
“They now started to pay a tariff to bring cars into Canada, both Stellantis and General Motors, and that’s what really triggered them and sent them to the White House,” the official, who is familiar with their conversation, said.
The official alleged the real issue had to do with mounting frustration within the auto sector over how Ottawa was handling the file, a view echoed by two other officials, one of whom said the breakdown had more to do with industry anger over the Canadian government’s “posturing” on autos.

Canada, the U.S. and Mexico now must decide by July 1 whether to renew the United States–Mexico—Canada Agreement for another 16 years; otherwise, talks would continue until issues are resolved or the pact expires in 2036.
“We understand that there are conversations occurring, but that they’re not robust. They’re certainly not sitting down and dealing with the issues,” one of the officials said.

Doesn’t even mention dairy. Less than 2 months until July 1 and Carney continues to burn jet fuel to Europe.

 

[TOPDAWG]

So is this pretty much a done deal? Is it dead? I mean, it would be easy to fix just change it so Trump gets a McDonald’s hamburger on top of the old deal and he signs a new deal. As long as he can say he won and act like he made a better deal, it wouldn’t take much.

 

[Thinker]

Trump has less leverage now internally due to the war with Iran. Plus, Carney centralizing power underneath himself makes the negotiations interesting. For now we will see what happens.

 

[TOPDAWG]

they'll make some type of BS deal they were always going to do that. carney just needed it as a boggy man.

 

[CaptainTrouble]

In theory, the USA currently gains more from CUSMA than Canada does. I say "in-theory" because Canada has the capability of turning its advantages into weaknesses with its heavy government regulations.