Trump’s Treasury Chief Says U.S. Can Still Reach Canada Trade Deal Despite Stalled CUSMA Negotiations

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A potential breakthrough in the Canada–U.S. trade dispute remains possible, even as formal negotiations struggle to regain momentum. U.S. Treasury Secretary Scott Bessent has expressed confidence that Washington can reach trade agreements with Canada and Mexico, offering a cautiously optimistic message amid months of tariff tensions and political disagreements.

His comments come as Prime Minister Mark Carney’s government attempts to restore negotiations following their collapse in August. Although the Canada–United States–Mexico Agreement (CUSMA) remains in effect, Washington’s refusal to renew it in its current form has created uncertainty about the future of North American trade.

For Canadian manufacturers, exporters and workers, the stakes extend far beyond diplomatic statements. With tariffs affecting major industries and businesses facing difficult investment decisions, Bessent’s optimism raises an important question: Can both countries overcome their differences before the economic damage deepens?

Bessent Signals Optimism, but Offers No Road Map

Scott Bessent’s message on November 13 was clear: in a CNBC interview, the U.S. Treasury secretary said he was optimistic that Washington could reach trade deals with Canada and Mexico. Reuters reported that he did not explain what concessions might be involved, identify a negotiating timetable, or suggest that an agreement had been finalized. That leaves his statement as an expression of confidence rather than an announcement of a breakthrough.

The distinction matters because the Trump administration has combined renewed diplomatic engagement with aggressive tariff threats. Just one day earlier, Trump warned that he could double tariffs on Mexico over a migrant caravan approaching the U.S. border. Bessent did not address that warning during the remarks reported by Reuters. For Canadian exporters, a hopeful comment from a senior cabinet official can encourage attention, but purchase orders and long-term investment plans ultimately depend on enforceable tariff terms, not on upbeat interviews.

Canada’s Chief Negotiator Says Formal Talks Remain Uncertain

Canada’s lead trade negotiator, Janice Charette, offered a guarded assessment on November 12. Speaking at the Toronto Global Forum, she said Canadian officials were in contact with American counterparts but did not know when detailed formal talks might resume. She also pointed to conversations between Prime Minister Mark Carney and Donald Trump, as well as exchanges involving Canada–U.S. Trade Minister Dominic LeBlanc. Communication, in other words, has not stopped; structured negotiations remain uncertain.

That is a distinction after months of mixed signals. Carney said on November 3 that discussions had become more intense and that Washington had dropped some demands involving Canadian language, culture and independent trade policy. Yet the reported progress has not produced a signed package or a confirmed return to formal bargaining. A supplier hoping for relief on shipments across the border cannot treat conversations as a change in customs duties. Until negotiators settle terms, uncertainty continues.

CUSMA Remains in Force Despite Washington’s Refusal to Renew

The trade agreement itself has not disappeared. CUSMA, known in the United States as the USMCA, entered into force on July 1, 2020. At its first mandatory joint review on July 1, 2026, Washington declined to extend the pact for another 16-year term, while Canada and Mexico favoured renewal. The U.S. Trade Representative explicitly stated that the agreement would remain in force despite the decision.

Under Article 34.7, the three countries must now hold annual reviews until all agree to extend the agreement or its existing term ends in July 2036. The withdrawal procedure allows a country to leave with six months’ written notice; declining renewal alone does not accomplish that. This legal distinction is crucial for companies that still rely on CUSMA rules of origin. The framework provides continuity, even as country-specific tariffs and unresolved questions about the next review undermine confidence in how predictable future trade will be.

August’s Failed Negotiations Explain the Continuing Deadlock

August’s breakdown explains why governments are cautious about promising a deal. On August 18, Canada said progress had persuaded Washington to delay a 50% tariff for three days. Instead of an agreement, Carney ordered Canadian negotiators home on August 21, saying last-minute American proposals were unfair, unsound and incompatible with Canadian objectives. What had looked like an opening became a confrontation.

Carney described disagreements over Canada’s freedom to negotiate with other countries, safeguards for language and culture, and the treatment of the auto industry. Ottawa offered to encourage provinces to resume U.S. alcohol sales and take administrative steps on dairy, while seeking tariff reductions on steel, aluminum and vehicles. Washington presented its concerns differently, criticizing Canadian restrictions on American automobiles, dairy products and alcohol. Those competing accounts reveal why technical tariff negotiations became an argument about sovereignty. A final deal would need to reconcile market-access demands and important Canadian protections.

Trump’s 50% Tariffs Have Already Triggered Canadian Retaliation

U.S. tariffs already affect a variety of Canadian goods, not just negotiating positions. Following August’s failed talks, Washington activated 50% duties on a group of Canadian products under Section 338 of the Tariff Act of 1930. Canada estimated the targeted trade at C$27.6 billion and introduced retaliatory duties on an equivalent value of U.S. imports starting September 8. Depending on the product, Canada’s rates were 15%, 25% or 50%.

The dispute reaches products outside the auto sector. Canadian countermeasures include steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. In October, the White House changed the list of Canadian goods covered by its Section 338 actions, underscoring that tariff exposure can shift even without a negotiated settlement. Crucially, the 50% U.S. duties apply to designated products whether or not they qualify as originating under CUSMA. It would be misleading to describe them as a universal tariff on Canadian exports.

Steel, Aluminum and Lumber Industries Face Continued Pressure

Steel, aluminum and lumber clearly show how tariffs reshape industrial decisions. In April 2026, the Bank of Canada reported that U.S. duties had helped cut Canadian steel exports by half. Aluminum shipments fell sharply before later partly recovering as U.S. inventories declined and Canadian producers found alternative markets. The central bank said aluminum sales shifted toward Europe, though often at lower profit margins.

The damage is uneven. A steel producer supplying an American construction project may lose orders immediately, while a Canadian manufacturer that buys imported metal can face higher costs. The Parliamentary Budget Officer identified steel, aluminum and forestry among the industries particularly vulnerable to recent trade measures. Ottawa has also described sectoral tariff relief as a central objective in dealings with Washington. A negotiated reduction could improve conditions quickly, but reversing supply-chain changes, rebuilding customer relationships and restoring investment confidence would take longer than removing a customs charge.

Canada’s Auto Industry Has Billions at Stake in a New Agreement

For Canadian auto makers, the dispute affects production built around the border. Federal industry briefing materials put two-way Canada–U.S. automotive trade at C$152 billion in 2024. The countries share automakers, parts suppliers and interconnected manufacturing processes, meaning tariffs can affect a vehicle long before it reaches a showroom. An assembly plant can meet an order only when its supplier network can deliver components reliably and at a workable cost.

U.S. Section 232 rules impose a 25% tariff on vehicles that fail CUSMA origin requirements and on the non-U.S. content of qualifying vehicles; qualifying auto parts currently receive different treatment. Statistics Canada found that U.S. demand accounted for 76.4% of jobs in Canadian automobile and light-duty vehicle manufacturing in 2024. Figures explain why Ottawa argues that any new deal must protect Canadian production. For workers in southern Ontario, arguments over content rules translate into questions about shifts, hiring and future models.

The Economic Stakes Extend Far Beyond the Trade Negotiations

The commercial relationship is too large to treat as an isolated diplomatic dispute. U.S. Trade Representative data put bilateral goods-and-services trade at approximately US$872.3 billion in 2025. Canada purchases American vehicles, machinery, farm products and energy, while the United States buys Canadian energy, vehicles and agricultural goods. When tariffs interrupt those flows, exporters and buyers on both sides may have to find alternatives or absorb higher costs.

The exposure reaches households through jobs and purchasing power. Statistics Canada estimated that production for the U.S. market accounted for 15.9% of Canadian GDP and supported more than 2.5 million jobs in 2024. In October 2026, the Parliamentary Budget Officer projected that trade measures introduced since early 2025 could leave Canadian real GDP 1.4% lower after five years than under a pre-tariff baseline. That is a modelled comparison, not a measured loss already realized. The uncertainty alone complicates decisions about expansion and wages.

Mexico’s Separate Negotiations Add Another Complication for Canada

Bessent’s reference to Mexico mattered. CUSMA joins all three economies, yet the negotiations have proceeded at different speeds. The U.S. and Mexico held formal bilateral rounds in 2026 on automotive rules of origin, steel, aluminum, agriculture and economic security. Mexican leaders sought tariff relief in return for addressing Washington’s concerns about Chinese-linked investment and production inputs. By contrast, Canada’s formal negotiations broke down in August.

Separate talks can produce targeted compromises without rewriting the full three-country agreement. They can create competitive pressure: automakers and suppliers may compare the treatment available in Mexico with costs faced in Canada. The politics remain volatile. On November 12, Trump threatened to double tariffs on Mexico unless it stopped a northbound migrant caravan, illustrating how border policy can intrude into trade discussions. Nothing in Bessent’s November 13 remarks established that Mexico or Canada had accepted terms. The question is how separate understandings could fit together.

A Trade Deal May Come in Stages Rather Than One Major Agreement

A durable settlement may arrive in stages, not all at once. Canada’s chief negotiator has distinguished efforts to stabilize bilateral relations from the formal CUSMA review-and-renewal process. Early possibilities include deals on steel, aluminum or auto tariffs, followed by harder negotiations over the treaty’s rules and future. On November 12, U.S. Trade Representative Jamieson Greer confirmed recent contacts with Ottawa, emphasizing a deal’s substance over any deadline.

A formal process is moving ahead regardless of political statements. The U.S. Trade Representative has opened a public consultation for the 2027 annual CUSMA review, with written comments due January 12, 2027. Businesses can therefore prepare for both near-term tariff bargaining and longer-term changes to the regional framework. For now, the test of Bessent’s optimism is whether officials announce a negotiating timetable, disclose mutually acceptable terms and implement measurable and lasting tariff relief. Until then, hope is not the same thing as certainty.

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