The Trump administration surprised no one with the long-awaited announcement Wednesday that the US will not join Canada and Mexico in expanding a free trade agreement between the three countries.
Where things go from here, however, renegotiating the Canada-United States-Mexico Agreement (CUSMA) is anyone's guess.
One thing is certain: the agreement is still valid while the negotiations continue, as it does not expire for another 10 years.
The only condition that could change that is a formal six-month withdrawal notice, something US President Donald Trump has stopped short of threatening to do.
Domestic political concerns are keeping the White House from scrapping the trade deal, according to Simon Lester, a trade expert and non-resident at the Baker Institute at Rice University in Houston, Texas. He says CUSMA has broad support from Republicans in Congress, especially those from agricultural districts.
“I think the administration felt like, 'We can't make them escalate, we can't just look them in the eye and say we're going to back off,'” Lester told CBC News.
The US refused to extend CUSMA past 2036 after a Canada Day meeting with Canadian and Mexican officials. Canada-US Trade Minister Dominic LeBlanc explains why the decision comes as no surprise and what's next for the trade agreement review.
Instead of scrapping the deal, the Trump administration signaled Wednesday that it wants to renegotiate some of its terms.
“The United States will continue to negotiate with Mexico and Canada to resolve the issues of the agreement and our trade deficit with these countries,” said US Trade Representative Jamieson Greer in a statement.
Side deals 'definitely possible'
“The agreement is still valid pending the resolution of these issues or until the agreement is terminated,” said Gerer.
A senior Trump administration official offered insight Wednesday into how the negotiations could play out, during a meeting with Washington-based reporters, including CBC News.
The US could reach what the official described as “protocols” with each country that could – in the White House's opinion – improve CUSMA.
“I've seen a world where, you know, we have a deal with Mexico or a deal with Canada under President Trump,” the official said, speaking on condition of anonymity.
“I think that is possible if those agreements, or if those agreements, are really intended and have a reduction effect [trade] shortage in those countries.”
The official said Trump “remains skeptical” that such deals can be reached with Canada and Mexico.
“But I think it is in the interest of our countries to continue negotiating to see if there is a suitable place to land,” said the official.
'We are ready to have those discussions'
Canada-US Trade Minister Dominic LeBlanc opened the way.
US negotiators “want to make bilateral agreements with Canada and Mexico to address a number of issues and we are ready to have those discussions with them,” LeBlanc told CBC News on Wednesday after meeting with Greer and his Mexican counterpart, Marcelo Ebrard.
While everyone is still willing to talk, it is not clear that there is a willingness to compromise on trade irritants.
The Trump administration has signaled that its priorities include more US-made content in cars and greater access to the Canadian dairy market.
But is the White House willing to discuss Canada's high demand, cut US tariffs on steel, aluminum and autos?
“It is difficult to see how the president's policies will be compatible with the reforms,” said the official. “But we know they're interested in this, and obviously it's going to be up to President Trump to decide whether or not what kind of fix is appropriate.”
It's not a no.
Are US demands realistic?
Lester, a trade expert, questions whether it makes sense for the US to expect significant concessions from Canada and Mexico.
“I am not sure that what they want can be achieved,” he said. “Can they get these concessions, given the fact that they probably aren't willing to give much in return?”
Now that the July 1 milestone has passed, the timeline for the CUSMA review negotiations is unknown.
Some observers have suggested that Republicans are likely to seek a deal by Labor Day to give the US economy a shot in the arm ahead of key November midterm elections.
Prime Minister Mark Carney says he doesn't expect 'any drama' at the first trilateral CUSMA review meeting set for July 1. 'We expect a constructive exchange,' Carney said of the planned meeting between Canadian, American and Mexican trade representatives.
Some doubt that a new US trade deal with Mexico and/or Canada will be a big sell in the campaign, and believe that negotiations could continue into 2027.
“Normal politicians see trade deals as a political win. I think Trump is a little different because he sees tariffs as a political win,” Lester said.
“I think the most likely scenario is that they just keep talking and nothing is decided before the midterms. After the midterms, everything is up in the air.”
On paper, according to the CUSMA document, the three parties can now enter into an endless series of renegotiations every year until the agreement expires in 2036.
In fact, they could reach an agreement extend the agreement at any time.
A senior Trump administration official said it was not in US interests to drag out negotiations for a decade. “I think we should come to an end as soon as possible.”
