Remember last weekend when we outlined how the sudden sense of urgency from Europe toward a trade agreement with Mexico? that agreement had little to do with purchasing row crops from Mexico, and everything to do with what Europe needs as access to the United States {Go Deep}.

The language being used by the United States trade office is specific. [SEE HERE] The first bilateral round of negotiations between the United States and Mexico for the USMCA free trade agreement has concluded. (Emphasis mine)

PRESS RELEASE – “MEXICO CITY — “Today, the United States and Mexico concluded the first bilateral round related to the Joint Review of the United States-Mexico-Canada Agreement (USMCA).

The United States concluded discussions with the goals of reducing the trade deficit with Mexico and strengthening American supply chains. During this first round, negotiators discussed priority issues related to automotive rules of origin, steel and aluminum, and economic security.

The United States and Mexico recognize the importance of advancing cooperation to enhance regulatory compatibility to strengthen sectors, including medical devices, pharmaceuticals, cosmetic products, and others.

We will continue advancing these discussions on June 16-17 in Washington, D.C., in addition to agriculture and a level playing field. The third round will be held during the week of July 20 in Mexico City.

The United States continues to emphasize the importance of ensuring the Agreement benefits U.S. manufacturers, farmers, ranchers, workers, service suppliers, and businesses of all sizes, and of addressing free-riding from third countries.” (source)

Currently, European automakers have billions invested in Mexican auto plants.  Much of the component material for those vehicles comes from Europe for assembly in Mexico.  That was the primary focus of the Europeans in their trade agreement with Mexico.

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I never quite understood just how controlled the information flow is inside Canada until about two years ago when we began closely monitoring Canadian positioning for the upcoming USMCA (CUSMA) renegotiation/cancellation.  It quickly became obvious the majority of Canadians have no idea why it is almost a certainty the U.S. would exit the trilateral arrangement and position for a bilateral free trade agreement.

In the two years that have passed, now we see a few Canadians starting to realize the core issues of trade conflict that make any FTA between the U.S. and Canada almost impossible.  The largest issue centers around Canada’s net-zero carbon legislation that now completely disconnects them from aligned North American energy policy between the U.S. and Mexico.

A trilateral agreement requires core alignment on industrial manufacturing, and that requires similar abilities & similar energy policy.  You cannot make steel, iron and aluminum without coal and gas.  You need joules for heavy industrial manufacturing that cannot be achieved without exploiting coal, gas or oil (carbon materials).  Canada’s energy policy no longer aligns with industrial manufacturing. This core issue cannot be resolved at the current level of energy policy in Canada.

There are other issues like Canadian trade deals with China, non-tariff barriers, legislated rules over intellectual property and other points of significant friction that make alignment within North America challenging. However, the energy component makes compatible trade impossible.

In the interview below, U.S. Ambassador to Canada Pete Hoekstra appears on a podcast with David Leis, for a blunt conversation about trade, pipelines, critical minerals, China, and why the U.S. is growing frustrated with Canada’s direction.  At the end Hoekstra even explains why he is doing Canadian podcasts; because information within Canada is restricted by the government control of media – and that explains why most Canadians are clueless about the issues.

I’ve prompted the interview to the point that gets into the details. If you are interested to be fully understanding of what is coming, this is a solid reference point. Also, if you have financial investments associated with Canada or any system that is connected to the economic relationship between the U.S. and Canada, you need to watch this interview to proactively defend your financial interests.  VIDEO PROMPTED:

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Watch it or listen to this roughly 30 minutes (prompted) as you cook, drive or go about your day. But listen to it and see the disconnect between Canada and the USA as outlined.  Things are going to get much worse in this relationship as the finality of it all suddenly starts to sink in north of the border with the average Canadian.

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It’s not Mexico that needs a trade deal with Europe, it’s the opposite.

For almost two decades Europe has been investing heavily inside Mexico, particularly noted in the auto industry, as they positioned themselves to take advantage of NAFTA and later the USMCA as an entry to the U.S. market.

European auto companies spent billions on assembly plants in Mexico, where they could ship EU manufactured component goods to be assembled into NAFTA/USMCA compliant vehicles.  As President Trump and USTR Greer begin focusing on eliminating the USMCA trade agreement in favor of two bilateral deals (U.S-Canada and U.S-Mexico), Europe now needs to protect prior investment.

The prior Mexico-EU trade agreement has existed since 2000 (NAFTA timeframe).  In 2025 they agreed to a revised Free Trade Agreement (FTA) and finalized the terms and conditions yesterday.

MEXICO CITY, May 22 (Reuters) – Mexico and the European Union signed a long-stalled free trade agreement on Friday as they seek to decrease dependence on the U.S. and partially insulate themselves from U.S. President Donald Trump’s tariffs.

The accord, which they reached broad agreement on in 2025 but have delayed signing, expands a Mexico-EU trade accord from 2000, which covered only industrial goods. The new pact adds services, government procurement, digital trade, investment and farm produce.

Mexico’s President Claudia Sheinbaum, European Commission President Ursula von der Leyen and European Council President Antonio Costa are to sign the deal in Mexico City in their first summit in over a decade.

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This is not good news for Canada who appears to be hoping that leftists in congress will support the Canadian position on retention of the USMCA trade deal.  However, the position of the United Auto Workers and their President Shawn Fain works perfectly with the position of President Trump and U.S. Trade Representative Jamieson Greer.

The UAW leadership supported Kamala Harris in 2024, and they carry a lot of sway with Democrats in congress.  In fact, it is entirely possible the 20 Democrat Senators who wrote a letter to USTR Greer about getting tough on Mexico and Canada, may have been responding directly to what UAW President Shawn Fain is demanding.

The UAW rank and file align with President Trump and their leadership, despite their roots of alignment with Democrats, support the trade tariff approach by President Trump.  All of that nuanced interest now begins to assemble quickly, and the political leverage plan of Canadian Prime Minister Mark Carney looks weaker by the day.

Wall Street Journal – As North America’s trade treaty approaches renewal or renegotiation this summer, United Auto Workers President Shawn Fain slammed the deal and called on the U.S. to upend it—or scrap it altogether.

Fain’s position pits the 400,000-member union against both the American and foreign-based automakers that are calling on the U.S. to preserve the U.S.-Mexico-Canada trade treaty, or USMCA.

[…] Fain blamed USMCA and its predecessor, the North American Free Trade Agreement, for the loss of millions of American auto manufacturing jobs over the last several decades.

“Where it didn’t eliminate jobs entirely, it slashed wages and benefits,” said Fain, wearing a “Kill NAFTA” T-shirt on a video call. “There is no future for the U.S. working class that doesn’t address the free-trade disaster.”

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Somewhere along the path to the inevitable dissolution of the USMCA trilateral trade agreement, reality will set in for Canada.  Until then, denial is the preferred course of action from Prime Minister Mark Carney.  Not since COVID-19 have we witnessed an intellectual disassociation happening over such a large sector of a population.

According to the latest media reports, Prime Minister Mark Carney is set to announce a new Canadian Trade Advisory Council that will strategize the best moves within each sector of the Canadian economy to deal with the United States USMCA renegotiations.  Even at this latest date, the Canadian government is still under the belief they can negotiate themselves into a position where their status within the USMCA (CUSMA) will be retained.

Simultaneous to this announcement, the one best hope the Canadians have relied upon is also evaporating.  However, before discussing that aspect, let’s first look at the advisory council.

CANADA – Prime Minister Mark Carney is expected to unveil a new advisory council focused on Canada-US trade relations as Ottawa attempts to salvage Canadian-US trade amidst Donald Trump’s aggressive tariffs. According to reports, the council will bring together major business leaders, labour representatives and former politicians to advise the federal government ahead of the scheduled review of the Canada-United States-Mexico Agreement (CUSMA).

[…] While the entire list of figures present on the council has yet to be announced, the Government of Canada first announced the advisory committee in April 2026, and released a partial list of members. Members reportedly include Conservative leader Erin O’Toole, former Quebec premier Jean Charest, and other representatives from sectors such as energy, manufacturing and forestry. There are also multiple high-level Canadian executives present on the list released by the Prime Minister’s office on April 21. The committee will be chaired by Dominic LeBlanc, who currently serves as minister responsible for Canada-U.S. trade and intergovernmental affairs. According to the Prime Minister’s Office, the council’s role will be to provide strategic advice and industry expertise as Canada prepares for negotiations under the umbrella of Donald Trump’s renewed tariff threats.

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There was much fake news about the tech and finance leaders traveling with President Trump to China.  Moments ago, President Trump corrects the record:

TRUTH SOCIAL – “CNBC incorrectly reported that the Great Jensen Huang, of Nvidia, was not invited to the incredible gathering of the World’s Greatest Businessmen/women proudly going to China. In actuality, Jensen is currently on Air Force One and, unless I ask him to leave, which is highly unlikely, CNBC’s reporting is incorrect or, as they say in politics, FAKE NEWS!

It is an Honor to have Jensen, Elon, Tim Apple, Larry Fink, Stephen Schwarzmann, Kelly Ortberg (Boeing), Brian Sikes (Cargill), Jane Fraser (Citi), Larry Culp (GE Aerospace), David Solomon (Goldman Sachs), Sanjay Mehrotra (Micron), Cristiano Amon (Qualcomm), and many others journeying to the Great Country of China where I will be asking President Xi, a Leader of extraordinary distinction, to “open up” China so that these brilliant people can work their magic, and help bring the People’s Republic to an even higher level! In fact, I promise, that when we are together, which will be in a matter of hours, I will make that my very first request. I have never seen or heard of any idea that would be more beneficial to our incredible Countries!”

~ President DONALD J. TRUMP

“Tim Apple” always cracks me up. lol

As previously noted and discussed by USTR Jamieson Greer, since the original trip to Beijing was announced several months ago, it was very easy to identify this visit was not a customary ‘state visit’ in the formal sense of the term.  Instead, this trip was always planned as a trade, finance and economic business trip specifically to engage Chairman Xi with a financial and investment focus.

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There is a certain irony in the timing all things considered.  President Trump has given the EU until July 4, 2026, to fulfill the trade agreement previously negotiated (ie. the Turnberry Agreement) or 25% tariffs on EU automobiles will be triggered.

(Via Truth Social) – “I had a great call with The President of the European Commission, Ursula von der Leyen. We discussed many topics, including that we are completely united that Iran can never have a Nuclear Weapon. We agreed that a regime that kills its own people cannot control a bomb that can kill millions. I’ve been waiting patiently for the EU to fulfill their side of the Historic Trade Deal we agreed in Turnberry, Scotland, the largest Trade Deal, ever! A promise was made that the EU would deliver their side of the Deal and, as per Agreement, cut their Tariffs to ZERO! I agreed to give her until our Country’s 250th Birthday or, unfortunately, their Tariffs would immediately jump to much higher levels. Thank you for your attention to this matter.”  ~ President DONALD J. TRUMP

U.S. Trade Representative Jamieson Greer recently spoke directly about what was creating this problem.  His interview and explanation in detail is below (MUST WATCH):

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Susan Kokinda of Promethean Action PAC does a great job with this video presentation of how Canada is the tip of the spear in how the EU and Commonwealth are trying to undermine President Trump.  In the background, this is where it becomes important for President Trump and President Putin to organize a strategic alliance.

“As attention focused on President Trump’s Iran breakthrough, Canadian Prime Minister Mark Carney met European and Commonwealth leaders in Armenia and said the rules-based international order is over, arguing it will be rebuilt out of Europe around Canada, the EU, the UK, and Australia. The episode frames this as a rival power center consolidating against Trump’s America, then highlights Carney’s appointment of Louise Arbour as Canada’s Governor General, emphasizing the office’s powers and Arbour’s role as a UN tribunal prosecutor and advocate for creating the International Criminal Court, alongside references to George Soros’s Open Society support for the ICC and Jack Smith’s work there.

The script then covers a Trump administration press conference on beef, citing declining cattle numbers, ranch losses, and consolidation among four meatpackers controlling 85% of processing, and links this to decades of cartelization and foreign influence in food and commodities.”

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Previously, Toyota Inc informed the Canadian trade delegation that if the USMCA (CUSMA) was dissolved, the most important auto manufacturing operation they have in the country would end.  Toyota was being respectful and brutally honest with the Canadians.

Last year, at almost the same time as Toyota made their position clear, Honda put a pause on the plan to build EVs in Ontario [2025 Notice] pending additional review.  Today, according to Nikkei, Honda has now completed that review and cancelled the plan.  Honda will not build EVs in Canada.

Asahi Kasei, the Japanese material supplier that makes battery separators, a core component used in lithium-ion batteries, will likely make a similar announcement soon.  The decision is in response to declining EV sales in combination with current U.S-Canada trade friction.  Without guaranteed access to the U.S. market, it makes no sense to invest in Canada.

Electrek – “Honda is shelving its massive C$15 billion ($11 billion) EV and battery manufacturing hub in Ontario, Canada, according to a new report from Nikkei. The move escalates what was initially framed as a temporary pause into what increasingly looks like an indefinite retreat.

[…] When Honda announced the Alliston, Ontario project in April 2024, it was billed as the company’s most ambitious EV commitment yet. The plan called for a new EV assembly plant capable of producing 240,000 vehicles per year, a 36 GWh battery factory, and cathode material processing facilities through joint ventures with POSCO Future M and Asahi Kasei. Production was targeted for 2028.

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How do you sum up the economic forecast for Europe? This story highlights one of the craziest stories in a long time. This is so blindingly suicidal, it cannot be stupidity. This is intentional.

BACKGROUND – You might remember last year due to climate/carbon emission regulations inside Europe EU automakers had to pay fines to the EU Commission if they did not meet electric vehicle targets. In order to avoid the penalties many EU automakers began purchasing ‘carbon credit’ offsets from Chinese EV automakers.

European car makers were paying China for carbon credits, and Chinese car companies began using the payments to lower prices. Europe was, essentially, paying China to undercut their own auto market. The result was European car makers, specifically those in Germany, losing market share to lower price EVs from China.  German industry began shrinking.

If that wasn’t crazy enough, what comes next is beyond laughable. As a result of lost sales and diminished volumes, Volkswagen had shut down auto plants. Now, Volkswagen is announcing that Chinese automakers, their China “partners,” will take over the underutilized facilities and start building Chinese cars in Germany.

GERMANY – Volkswagen Group is facing increased pressure from its board to further cut costs despite already announcing radical measures, such as axing around 50,000 jobs in Germany by 2030 and reducing production capacity by up to 3 million units per year to 9 million, which would make it very difficult to avoid plant closures or sales. Overall, Europe’s largest automaker aims to reduce costs by 20% by the end of 2028.

In an attempt to mitigate the effect of these measures, the automaker appears ready to do what not too long ago would have seemed unthinkable, namely selling China-developed cars in Europe and even sharing its underutilized plants in the region with its Chinese partners.

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