Trump’s trade war ‘blows a complete hole’ in CUSMA, architects say – National

The Canadian and Mexican architects of the Canada-U.S.-Mexico Agreement say Donald Trump’s trade war has crossed a line that essentially wipes out the continental trade pact, as experts suggest the president’s actions are meant to rattle America’s closest neighbours ahead of a mandatory review.

Canada’s chief negotiator, Steve Verheul, and Mexico’s chief negotiator, Ken Smith Ramos, said the devastating duties essentially suspend the Canada-U.S.-Mexico Agreement.

“With 25 per cent tariffs, it blows a complete hole in the trade agreement,” Verheul said Wednesday.

“It makes it virtually worthless to us. In fact, it leaves Canada and Mexico in a far worse position than any other country in the world practically.”

Trump followed through Tuesday on his threat to impose sweeping economy-wide tariffs on Canada and Mexico, with a lower 10 per cent levy on Canadian energy.

Ottawa responded with retaliatory tariffs on $30 billion in American goods the same day. Another $125 billion in Canadian tariffs are set to come into effect 21 days later.

Mexican President Claudia Sheinbaum said her government would announce duties on targeted products and other measures Sunday. She said “there is no motive or reason, nor justification that supports this decision that will affect our people and our nations.”

Trump pushed ahead with the levies on Canada using the International Economic Emergency Powers Act, a national security statute that gives him authority to control economic transactions, after he declared an emergency on fentanyl at the northern border.

But U.S. Customs and Border Patrol data shows only a small volume of fentanyl crosses illegally into the United States from Canada. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.

Verheul repeated Wednesday that the excuse of fentanyl to impose tariffs is unjustified in the case of Canada. He said “absolutely none of this is necessary.”

Prime Minister Justin Trudeau has said what Trump “wants is to see a total collapse of the Canadian economy, because that will make it easier to annex us.” Trudeau said Canada will file claims against the levies with the World Trade Organization and through the Canada-U.S.-Mexico Free Trade Agreement.

Verheul and Ramos were key figures when CUSMA was negotiated under the first Trump administration to replace the North American Free Trade Agreement. Trump described it at the time as the “best agreement we’ve ever made.”

Verheul and Ramos have partnered with Kevin Brady, a Texas Republican and the former chairman of the House of Representatives committee on ways and means, to form the Coalition for North American Trade, along with a global law firm.

The goal is to join forces to share the economic and security benefits of the agreement — which they say has become more important and increasingly challenging under the tariff sabre-rattling of the Trump administration.

Trump’s duties against Canada and Mexico caused a tumultuous week on Wall Street — the first test of the president’s expanding tariff plan.

Trump also ordered 25 per cent tariffs on all steel and aluminum imports into the United States on March 12, which the White House has confirmed would stack on top of the other duties imposed on Canada.

Trump signed an executive order to implement “reciprocal tariffs” starting April 2. Other tariff targets include automobiles, copper, lumber and agricultural products.

Trump on Wednesday granted a one-month exemption for any vehicles coming through CUSMA after the Big Three automakers — Stellantis, Ford and General Motors — had a conversation with the president.

Ramos said when tariffs stack on top of each other, it’s hard to justify prioritizing trade with America — tariffs at 50 per cent are the same as 5,000 per cent.

“It doesn’t make sense anymore,” he said.

Mexico is acting on the president’s border concerns, looking to build a long-term plan, but Ramos said it must be separate from trade if there are to be good-faith conversations about a trade pact.

The CUSMA review scheduled for 2026 could have one of three outcomes. The three partner nations could submit recommendations for changes, tweak the agreement and sign up for another 16-year term, or one of the countries could also pull out of the agreement entirely. The third possible outcome would see the Trump administration, or another country, withhold renewal, pushing the issue back for 12 months. That would likely prolong market uncertainty.

The agreement’s architects say the ideal situation is that they tweak the agreement — although that seems unlikely considering the current geopolitical environment.

“Canadians think the U.S. is no longer a reliable trading partner,” Verheul said at the Washington launch of the coalition.

Brady said the future of the U.S. relationship with Mexico and Canada is no longer clear. Both countries remain America’s largest customers, the Republican said, and the agreement helped solidify that relationship.

“Leaving this agreement or allowing it to expire will have a very damaging impact on millions of American workers and families,” Brady said.

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