The missing aspect in all USMCA/CUSMA trade discussions is the simple fact that President Trump and U.S. Trade Ambassador Jamieson Greer would prefer bilateral trade agreements.  The reason is simple and is highlighted in all the problems with the three-party USMCA.

Two countries can negotiate based on their individual interests; multiple country assemblies get complicated.  Canadian Prime Minister Mark Carney and his “middle power” strategy of multiple interests assembling to create larger influence simply doesn’t work in trade discussion.  That’s the bottom line.

Reuters is reporting the obvious.  Mexico and the United States are racing to reach a bilateral trade deal before the U.S. midterm elections in less than eight weeks, according to six sources in both countries familiar with the talks, an effort made more urgent by the collapse of Canadian negotiations with Washington. Both USTR Jamieson Greer and President Trump have previously said the deal with Mexico would likely come first.

Mexico has played this very well.  Mexican President Claudia Sheinbaum has not participated in any antagonisms toward the U.S. position; they are simply negotiating for their best outcome.  The Mexican government officials don’t try to hide their U.S. dependency under the misguided premise of patriotism.  They understand the nature of the relationship.

If President Sheinbaum wants to keep a strong economy, she needs the USA.  Both leaders want a trade agreement; it’s business beyond politics.  Canada on the other hand is playing pure politics and trying to carve out a deal for themselves the rest of the world doesn’t have.  Canada wants to be excluded from the baseline tariffs applied to everyone, that’s not going to happen.

CANADA – As noted in the Globe and Mail, “Former Canadian ambassador to the U.S. Kirsten Hillman said she doesn’t believe Canada and the United States will resume formal negotiations soon.” {Source, non-paywall} Kirsten Hillman served as ambassador and acting ambassador to the U.S. for more than six years and five months, ending in February. “In any trade negotiation, there comes a point when countries articulate their red lines and hold firm to them. Canada has reached that point in these discussions,” Hillman said. “The main message that people in the United States need to understand is Canada will not accept a deal that tanks our steel industry, or tanks our auto sector, and nor should we,” the former envoy said.

Canada believes they can negotiate a deal that removes the section 232 steel and aluminum tariffs, as well as eliminate the baseline tariffs.  That is not going to happen.

When announcing the baseline tariffs last year President Trump specifically said all trade relationships would change.

The US informed all of its trading partners it was changing the trading relationship, with the U.S imposing a base line tariff on all imports into the US. The reasons were simple. The U.S wants to raise revenue to address the deficit and debt; and Trump is facilitating the reshoring of manufacturing in key sectors of the economy.

Mexico understands this and can see the value in a strong American economy lifting up the Mexican economy; Canada, filled with hubris, does not share that same outlook.

Mark Carney, on behalf of his British Commonwealth interests, wants to control the expansion of the American economy. Two entirely different approaches, and as a result the bilateral strategy with two separate trade agreements becomes a self-fulfilling prophecy.

REUTERS – Mexico and the United States are racing to reach a bilateral trade deal before the U.S. midterm elections in less than eight weeks, according to six sources in both countries familiar with the talks, an effort made more urgent by the collapse of Canadian negotiations with Washington.

“We both want to reach a deal before the midterms,” said one Mexico-based source, who spoke on condition of anonymity to discuss private talks.

The negotiations are aimed at striking an interim bilateral bargain under which Mexico could win relief from some U.S. tariffs while addressing U.S. demands on areas including automotive content and Chinese investment.

While no formal deadline exists, officials in both countries see political benefits in reaching a deal before the November 3 elections when U.S. President Donald Trump’s Republican Party risks losing control of Congress. An accord would enable both leaders to tout a win as they face domestic political challenges.

“Time is of the essence for the Mexican government,” said the Mexican source, citing concerns over a weak economy and falling credit ratings on its debt. The source added that Mexican President Claudia Sheinbaum’s administration, which this week presented its 2027 budget, views a U.S. trade deal as critical to reassuring markets and investors.

A spokesperson for Mexico’s economy ministry said, “There are no specific deadlines at this time,” stressing the government’s ongoing commitment to dialogue with Washington.

The U.S. Trade Representative and White House did not immediately respond to a request for comment.

MEXICO CONCILIATORY – Mexico’s push to reach a deal comes after trade talks between the United States and Canada collapsed last month, plunging the longtime allies into a bitter tariff dispute. […] The collapse of Canada’s talks has reinforced Mexico’s strategy of avoiding direct confrontation with Washington, betting that cooperation will yield tariff relief.

The Mexican source described the country’s approach as “play nice and continue to cooperate.” Mexico sends more than 80% of its exports to its northern neighbor.

Reflecting the intensified pace, U.S. Commerce Secretary Howard Lutnick met virtually with Sheinbaum on Thursday about trade.

The meeting, originally scheduled in person, came less than two weeks after Sheinbaum proposed legislation giving the government new powers to review and block foreign acquisitions of Mexican companies.

The measure, which would create an investment-screening regime similar to those in the United States and Canada, is widely seen as a response to U.S. pressure for closer scrutiny of Chinese investment. (more)

We have watched this dynamic play out for almost two years, and we watched the original framework constructed in 2017 and 2018 before that.  I am often asked when we will see the ultimate trigger to eliminate the trilateral complexity thereby setting Canada on the path to economic contraction.  My answer today is the same as it was two years ago.

We will see the Trilateral USMCA termination notice after the United States and Mexico successfully conclude the Bilateral free trade agreement.

Prime Minister Mark Carney has tried to influence Mexico by requesting President Sheinbaum not negotiate with the U.S. bilaterally.  However, Sheinbaum is looking at the reality of the situation and unwilling to put her nation through the economic chaos that Carney has created.

Mark Carney and his trade Minister Dominic LeBlanc have lied to the Canadian people.  The Canadian government is playing politics.  Claudia Sheinbaum and Marcelo Ebrand have been honest with the Mexican people.  Mexico is focused on the economics.

Things are proceeding exactly as we would expect.

In the bigger picture, Mexico wall be under the “Shield of the Americas” both economically and with national security.

Canada has hitched their wagon to Europe.

Prepare your financial affairs accordingly.