There are a few that ankle bite about President Trump focusing on trade agreements as if it is foreign policy and not economic policy for America that is the #1 factor in our future.  I do not see value in such nonsense.  Economic security is national security – period.

After a day of Canadian government officials pushing a twisted narrative about their position regarding U.S-Canada trade, President Trump puts forth a simple truthful statement:

[SOURCE]

Additionally, U.S. Trade Representative (USTR) Jamieson Greer talked to the New York Times about the current issues that created the fracture in negotiations. I will outline those aspects below.

CTH readers will note that in 2025 and again earlier this year, our prediction was the USMCA (CUSMA) would dissolve in/around early July, and the U.S. would ultimately end up withdrawing completely in/around August of 2026.  I would be remiss if I did not note current events are following a very predictable path.

Trade issues with Canada are irreconcilable against the entitlement that underpins the Canadian economic mindset.  You will note these “friction points” do not exist with Mexico; there is a cultural and brutally factual reason for this.

Canada feels entitled to maintain a trade relationship with the USA as if they are a state in our union.  However, just like the abusive mentality in any toxic relationship, Canada refuses any reciprocity.  Canada maintains protectionist tariffs, non-tariff barriers, quotas against U.S. goods and one-way restrictions on banking, finance, intellectual property and media. The latter part they call “cultural” protection.

Here are the distilled points noted by USTR Greer as explained to the New York Times:

[…] The United States had offered to reduce its tariffs on steel, aluminum and autos, and eliminate a recently imposed tariff on Canadian lumber, before negotiations suddenly collapsed last night, Jamieson Greer, the U.S. trade representative, said Saturday.

In an interview with The New York Times, Mr. Greer detailed previously confidential and unreported elements of the U.S. trade offer to Canada, saying those measures would have given Canada the most preferential treatment of any trading partner.

[…] over the following days, and particularly late into the night Friday, that consensus crumbled. It fell apart over a series of issues that, individually, may have seemed small but collectively represented a big division over issues of importance to both sides.

[…] Mr. Greer said that the Trump administration had pledged to eliminate the 10 percent tariff on softwood lumber that Mr. Trump imposed last year using a provision known as Section 232.

The United States had also offered to reduce a 25 percent tariff on cars that Mr. Trump put in place last year. But because Canada qualifies for a further reduction when the cars contain any amount of U.S. content, the automotive tariffs could have gone as low as 7 percent, he said.

The United States also offered to lower tariffs on metals, one of Canada’s most important priorities.

“The United States was prepared to reduce the tariff on steel from 50 percent to 25 percent for the majority of steel Canada sent to the United States,” Mr. Greer said. Steel would be subject to what is known as a tariff-rate quota system, in which only a certain amount of steel imports would receive that lower tariff.

On aluminum, the United States had offered to reduce its tariffs to 25 percent from 50 percent without such a quota limitation, Mr. Greer said.

For products made with steel and aluminum, like golf clubs and beer cans, the United States offered to cut those tariffs by anywhere from 10 to 25 percentage points, with the lowest tariffs set at 15 percent.

Mr. Greer said that the United States had also offered to suspend the 50 percent tariffs that it brought into effect early Saturday morning on Canadian dairy, wine, hockey sticks and others goods.

“Obviously, we would completely suspend the 50 percent Section 338 tariffs that we were going to apply to 5 percent of Canadian exports,” he said, referring to the tariffs that went into effect Saturday. (Source)

You will note that “metals” are of keen interest to Canada.  That is because Canada relies on imported metal product, rolled steel, aluminum ingots etc., as an outcome of their energy policy.

Canada could not/would not promise to stop Chinese steel being transshipped into auto parts & then into the U.S. market.  Why? Because the U.S. requires a strict “melt and pour” rule.

Steel and aluminum must be melted and poured in North America to qualify for preferential treatment. This stops Chinese steel from entering Canada, getting light processing, and crossing the border as “North American” content to evade tariffs.

Why is this a problem for Canada specifically (not Mexico)?  Well, steel and aluminum cannot be made without coal and gas (heavy carbon emissions), because the core issue is heat (joules) for the melting. You cannot make molten metal from renewable energy, (ie. windmills and solar farms) you need massive heat (oil, gas, coal). It’s simple science, you need joules.

Canada’s energy policy, climate change stuff, is about the creation of electricity and non-carbon emissions. They have decarbonized their industry, and as a consequence have disconnected their ability to melt metal. That’s why they import rolled steel and cast aluminum ingots from China.

Their choice to decarbonize is exactly why Steel and Aluminum tariffs against Canada are structurally irreconcilable.

 ♦ So, what’s going to happen?

Last year and earlier this year I pegged August of 2026 as the likely USMCA (CUSMA) termination and then ultimately withdrawal date.  Think about it, if Canada refuses to reject ‘climate change’ and Canada refuses to accept tariffs, well, there is no option for a USMCA renewal.

Yes, it really is that structurally deliberate.

If I was to update my predicted schedule, I would now say President Trump is waiting for Canada to announce their retaliatory measures. It doesn’t make sense to wait until Canada announces retaliation and then just go up a notch from 50% to 75%, then they hit again and you go from 75% to 100% etc. etc.

It just makes more sense to call it quits, make the announcement and withdraw completely from the USMCA.  That would tell Carney the six-month clock is now ticking.  Then go back and finish a bilateral agreement with Mexico.

Eventually the reality will set in for Canada, and the collapse of the Canadian dollar (CAD) will begin as predicted by the Bank of Canada.

“A cascading series of events could cause a sharp loss of investor confidence and lead to a spike in demand for liquidity or rapid asset sales. Funding markets could come under pressure, and stress could spread more broadly.” {source}

Additionally, Lori Turnbull, a political scientist at Dalhousie University in Halifax, Nova Scotia, previously said that reopening the USMCA or trying to structure a bilateral deal to replace it reflects the impossibility for Canada of fully or even substantially replacing the United States as a trade and economic partner.

“Canada is going to have to find a way to deal with this, and the American are still going to put on the tariffs,” Professor Turnbull said. “We’re in the weak position and they can call the shots.” (link)

As a consequence, when Canada crawls back to the table for their bilateral discussion, they will end up with the exact terms they just rejected.