President Trump speaks to President Sheinbaum about upcoming USMCA renegotiation, while Mexican Economy Minister Marcelo Ebrard meets simultaneously in Washington with US Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer to discuss the upcoming trade review.

(VIA BLOOMBERG) Mexican President Claudia Sheinbaum said she had a “cordial” conversation with Donald Trump on Thursday, discussing trade and security issues ahead of the review of the North American free trade deal.

Sheinbaum said the review of the United States-Mexico-Canada Agreement will continue as planned and that she and the president discussed tariffs and non-tariff barriers in their latest call.

Mexico’s leader added that Trump invited her to the US but that no date has been set for what would be their second in-person meeting.

On security, Sheinbaum offered that both leaders are pleased with the level of cooperation so far between their two countries. Trump agrees “that we are making progress in the general understanding we have,” she told reporters at her regular daily media briefing, without offering more details.

Sheinbaum first revealed the latest phone call with Trump in a social media post. (read more)

We all know what is likely to happen, these small articles are like aperitifs while we await the main performance.   Meanwhile, the overwhelming majority of Canadians -sans possibly Alberta residents- are clueless.

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Ontario Premier Doug Ford went for a pizza with Canadian Prime Minister Mark Carney.  Following the meeting Doug Ford appears on camera for a debrief to explain how he has reversed his opposition to Chinese EV imports.  The presser looks like a hostage video (prompted):

USMCA Article 32.10 – Non-Market Country FTA (key provisions):

“A Party intending to negotiate a free trade agreement with a non-market country shall inform the other Parties at least three months prior to commencing negotiations and, upon request, provide information regarding the objectives of those negotiations.

A Party that enters into a free trade agreement with a non-market country shall provide the other Parties with the full text of the agreement prior to signing.

If a Party enters into a free trade agreement with a non-market country, the other Parties may terminate this Agreement on six months’ notice and replace it with a bilateral agreement.” [SOURCE]

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Canadian Ambassador to the U.S., Kirsten Hillman, appears on CBS Face The Nation to discuss ongoing political and trade relations between Canada and the United States – Video and Transcript below.

During one segment of the interview, Ambassador Hillman is asked about the dissolution of the USMCA (CUSMA) trade agreement, and immediately Hillman falls back upon the same Justin Trudeau position of the government. The U.S. politicians will not allow President Trump to dissolve the USMCA.

“I think that we have to believe that our political leaders are going to be listening to the people in the constituencies for whom that instrument was drawn up, and they’re saying, this is vital to us, do no harm.”

Canada is counting on American political opposition to defend the economic interests of Canada. This is exactly the same position that former Canadian Prime Minister Justin Trudeau espoused in 2017 and 2018.

[Transcript] – So a lot is going on in the relationship between our two countries. We are so deeply integrated here on trade, you buy more from the U.S. than any other country. We have the world’s longest land border. We have shared defense interests through NATO, shared air defense with NORAD. Are we like in the middle of a divorce? Like, how do you describe the relationship?

AMB HILLMAN I- I- we’re not in the middle of a divorce, but we are in the middle of a change. There’s no question about it. I think that we are finding ourselves, quite frankly, in- in a situation where some of the foundations that have governed our relationship for a long time, that you know, integrated supply chains are good, that working together on strategic issues is- are important, that looking out for each other in important ways is- is a number one priority. I think in some quarters, Canadians feel that those foundations are being tested. We will adapt. We will make it through, I have no doubt about that, but it’s yeah, it’s a complicated time.

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Canada signing a trade agreement with China to permit the import of EVs is another escalation in the exploitation of the USMCA compact.

For the position of China, using Canada as a route to ship component goods into the United States is just a slight expansion of their current technique to avoid U.S. tariffs.  However, President Trump is taking action immediately.

Noting on his Truth Social platform, President Trump announced that if Canada does effectively go through with allowing the import of Chinese electric vehicles, then the U.S. will impose a 100% countervailing duty against all Canadian imports.

[SOURCE]

“[…] As a part of the deal, Canada will ease the tariffs on Chinese electric vehicles that it imposed in tandem with the U.S. in 2024. In exchange, China will lower retaliatory tariffs on key Canadian agricultural products.” ~Politico

Canadian Prime Minister Mark Carney continues giving President Trump the ammunition to dissolve the USMCA trade agreement this year.

USTR Jamieson Greer and Commerce Secretary Howard Lutnick have both expressed anticipation of a new bilateral trade agreement to stop all this Canadian nonsense.

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Hilarious Bloomberg interview with Commerce Secretary Howard Lutnick.  The topics are European trade and politics combined with the overlay of Canadian trade and politics.  The Bloomberg panelists question Lutnick about the similar “feelings” of the Europeans and Canadians, as it pertains to the outcome of trade discussions.  It’s the feelings that make things difficult to negotiate.

Secretary Lutnick doesn’t dismiss the narrative but deconstructs the substance of the topic brilliantly.  Lutnick notes the ridiculous nature of the Canadian trade position and their decision to go running to China because their feelings are hurt.  Lutnick then affirms the USMCA is going to be dissolved mid-summer and fall of this year.

As we noted at the end of last year, splitting the USMCA into two bilateral trade deals, one for Mexico and one for Canada, will be one of the most interesting and long-term economically significant moves in U.S. trade history.  It is going to be a lot of fun to watch these negotiations, and the pre-positioning gives us a preview of what is to come.

Mexico is doing everything almost perfectly in preparation for their bilateral deal.  Canada is doing exactly the opposite and positioning themselves for the worst possible outcome of a deal with the USA.  The disparity in approaches is so different, even now it is remarkable to watch. PROMPTED:

(VIA BLOOMBERG) – […] Canada has “the second-best deal in the world” with its access to the US market, Lutnick said, behind only Mexico. The Commerce chief also indicated that Canada’s tilt toward China could become an issue in talks over revamping the US-Mexico-Canada trade agreement known as USMCA.

If Ottawa opts to import Chinese electric vehicles and other trade-strengthening steps with Beijing, “do you think the president of the United States is going to say you should keep having the second-best deal in the world” during USMCA talks, Lutnick questioned.

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President Trump’s impromptu remarks from inside the Ford F150 plant will probably not make headline news because, well, quite frankly, what President Trump says below is something the financial media just don’t want to discuss.

This is really an important point.  In the era where information is skewed based on the interests of the organization sharing the information, government or private sector media, it is extremely valuable to just listen to what President Trump says directly.  In comments such as this brief segment below, you can see exactly where he is going with manufacturing and trade policy.

Specifically pay attention to how President Trump emphasizes, then reemphasizes the irrelevance of the USMCA from his perspective.  As we have noted all along, the Trump administration (USTR Greer) will abandon the trilateral USMCA this year and instead begin a formal process for two bilateral free trade agreements.

Now, the entire financial media system is pretending this is not going to happen, especially in the statements by every stakeholder north of the border.  However, listen to how President Trump himself describes the USMCA or CUSMA as the Snow Mexicans like to call it.  Trump is completely nonplussed about what is going to happen.  WATCH:

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A recent article in Politico quoting several cabinet members of Prime Minister Mark Carney reflects a particular reality of the problem their economy will face in 2026.

It appears that Canadian government officials have finally recognized the Trump administration plans to dissolve the USMCA or what Canada calls CUSMA next year.  With that reality they have a big problem.

Mexico has been working throughout the year to initiate economic policies in alignment with the United States.  However, structurally and politically this is an alignment that is impossible for Canada to do.  Like many contracting European countries, the economic policies of Canada are centered around their climate change agenda and green energy goals.

For the past few decades Canada bought into the carbon scam and enacted climate change goals into law for carbon pricing, alternative energy production, industry and manufacturing costs.  These mechanisms to control “climate change” are nuts in the big picture.

In order for Canada to position their economy to be in alignment with the rest of North America (USA and Mexico), Carney would have to reverse years of legislated rules and regulations.  That is not going to happen, and Canada will always be at a disadvantage because of it.

(Politico) – […] It’s a moment of existential crisis for Canada, a senior Carney government official told POLITICO. Waiting out the Trump administration isn’t an option, the official said, arguing that what’s happening in the United States reflects a generational shift — not a temporary disruption — and that returning to a policy of closer integration with America would be foolish. (more)

With three quarters of their economic production tied to exports into the USA, and with the USMCA likely to be dissolved in favor of a bilateral trade agreement, Canada now has to find other markets for its products or lower all the trade barriers currently in place.  Prime Minister Mark Carney is trying to find alternative markets.

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Outlining why there literally is not enough time for a lengthy dual-track legislative trade policy to be constructed, Ambassador Jamieson Greer gives a great encapsulation of the urgency behind the trade policies, tariffs and negotiations between the U.S. and trade partners.

If President Donald Trump did not win in 2024, another four years of parasitic trade policy would have crossed the Rubicon of U.S. manufacturing recovery.   The urgently applied tariff strategy gave the administration breathing room to reestablish domestic economic growth.  USTR Greer and President Trump are now fine-tuning the tariffs country by country, sector by sector, to achieve ultimate economic benefit.  WATCH:

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In addition to being the main economic engine in Europe, Germany is the epicenter of the European Union’s overall goal to chase the green energy agenda.

For the past several years Germany has been deconstructing their fossil fuel energy production and replacing it with far more expensive alternatives.  This has led to large increases in overall energy prices, and downstream increases in manufacturing costs.

The consequences have been snowballing throughout 2025, while cheap competitive alternatives coming into the EU from China have compounded their problem.  Recently a survey of major industries was conducted in Germany to determine the forecast for 2026, the results are not good.

Approximately half of the industrial sectors in Germany are anticipating job losses, cuts or layoffs this year.

22 out of 46 business associations are preparing to downsize their labor force.  Only 9 of the 46 are expected to increase hiring.

At a top-line this looks bad.  However, when you look at the sectors contracting versus the sectors stable or expanding, you suddenly realize there is a bigger geopolitical problem within the forecast.

Job losses are expected in auto manufacturing, the textile sector, wood and paper fabrication.  Job gains are expected in aerospace, shipbuilding and defense production – i.e. the war machinery.

When the largest and most developed industrial economy in Europe is pinning its economic survival on war machinery, a particular momentum is created.  It is never a good outcome for Europe when Germany becomes reliant on war to maintain employment.

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The geopolitical baseline for Europe is often determined by the economics of their situation.  In 2024 approximately 408,000 cars from China were sold in Europe.  For 2025 that number is now expected to exceed 700,000 units despite tariffs.

Previously we highlighted the short-term ramifications of the European Union push to force the sale of electric vehicle (EVs) upon the consumer base.  {SEE HERE} EU automakers unable to meet the compliance goal began purchasing carbon credits to avoid stiff EU fines.  Many of those carbon credits were purchased from Chinese automakers, who then turned around and started using the extra EU revenue to discount Chinese cars sold in Europe.

In essence, EU car companies started subsiding China to undercut their own market. An outcome of the EU chasing the ridiculous green energy project throughout the European free trade zone.

Now reports are beginning to surface of how the non-EV segment of the industry is being lost to less expensive Chinese hybrid autos that: (1) are much cheaper, (2) not bad in quality, and (3) are not subject to the 35% EV tariff rate.

The EU tariff applied to gasoline powered cars or hybrids from China is 10%.  That tariff is not enough to stop the imports. The Chinese hybrid autos are substantially less than European car brands, and there’s no financial incentive for China to build auto plants in the EU zone especially when you consider the EU is subsidizing those cars by purchasing carbon credits.

When analyzed from a cost and consequence, the entire EU dynamic toward car companies is a little funny.  However, for Germany this is a serious issue, and with the German industrial economy already stagnant – every impact to their auto industry only makes the situation worse.

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