Good morning. In the coming weeks, the United States is expected to set in motion a renegotiation of the 2018 trade pact with Canada and Mexico \u2013 reviving old fights over market access and unleashing fresh strains over tariffs that will determine the fate of North America\u2019s tightly bound economy. No biggie! That\u2019s in focus today, along with a look at the week ahead.<\/p>\n
Up firstIn the news<\/p>\n
Tech: Canada\u2019s spy agency is warning Canadian tech entrepreneurs<\/a> about showcasing their wares at international pitch competitions organized by China, events it cautions pose a serious risk to their intellectual property.<\/p>\n Travel: Air Canada flight attendants who were on strike last month have voted against a deal to ratify a new collective agreement reached between their union and the air carrier, a step focused on wages<\/a> that will not result in another work stoppage.<\/p>\n Office space: Downtown Toronto landlords are cutting back<\/a> on years of tenant perks \u2013 from months of free rent to cash for office build-outs \u2013 as rising demand shifts power back in their favour.<\/p>\n Power struggles: Nova Scotia\u2019s electrical utility proposed rate hikes that could prompt a showdown<\/a> with a provincial government bent on improving affordability \u2013 and the utility\u2019s credit rating hangs in the balance.<\/p>\n On our radarKey this week: A U.S. inflation report on Thursday will shape bets on the Federal Reserve\u2019s rate decision next Wednesday. It\u2019s largely expected to cut. (So is the Bank of Canada that same day.)Tomorrow: The NFIB Small Business Economic Trends Survey provides a snapshot of monthly hiring, earnings and plans for expansion in Canada.Thursday: Markets are expecting the European Central Bank to hold its lending rate steady after a report last week showed price growth remained in its comfort zone last month. Friday: Statistics Canada reports building permits for July.Earnings this week include Giant Tiger parent North West Co. after markets close today and Sobeys owner Empire Co. on Thursday.Open this photo in gallery:<\/a><\/p>\n Photo illustration by the Globe and Mail\/iStockPhoto \/ Getty Images<\/p>\n In focusIt\u2019s fun to litigate the USMCA<\/p>\n When the United States, Canada and Mexico signed the USMCA in 2018, they broke with the tradition of open-ended trade pacts. The agreement carried a \u201csunset clause\u201d \u2013 a mandatory six-year review, framed as a way to keep the deal current but criticized as a built-in doomsday clock. <\/p>\n Robert Lighthizer, then the U.S. trade representative, called it a correction to the \u201ceternal\u201d life of most trade pacts: \u201cMost trade agreements, for reasons that don\u2019t make any sense to me, are eternal \u2026 this one is temporal.\u201d <\/p>\n In the coming weeks, Washington is expected to bring the deal\u2019s temporality into focus, triggering a review ahead of an Oct. 4 deadline that will determine whether the pact is renewed or allowed to wind down.<\/p>\n From there, months of consultations and congressional hearings will shape negotiating goals, leading into a two-year contest over the pact\u2019s future.<\/p>\n The review will test whether North America\u2019s integrated economy \u2013 its auto plants, supply chains, and farm exports \u2013 can hold together under a U.S. President who has already imposed punishing tariffs on Canadian and Mexican goods, sparing only exports that comply with USMCA\u2019s rules of origin.<\/p>\n For Canada, the risks of an unravelling free-trade pact are becoming more evident with every key economic report: <\/p>\n Statistics Canada reported last week that the country\u2019s unemployment rate jumped to 7.1 per cent<\/a> \u2014 the highest level since 2016, outside of the pandemic.Exports to countries other than the U.S. fell 8.6 per cent in July from the month before<\/a>, after a 4.2-per-cent drop in June, a stark reminder that the push to reduce the country\u2019s exposure to its largest trading partner will be a long process.On Friday, the agency\u2019s release of building permits data will highlight Ontario\u2019s \u201csubstantial underperformance\u201d in housing starts, RBC economist Nathan Janzen said \u2013 a drag on the national picture linked in part to the province\u2019s trade-dependent industries.<\/p>\n The possibility that the White House walks away from the pact entirely remains in play \u2013 endangering an agreement that shields exporters from duties that have climbed as high as 35 per cent on some products. \u201cCUSMA, in a very different trade environment, is going to look different,\u201d Prime Minister Mark Carney said last month, using the Canadian variation of the trade agreement\u2019s name. \u201cAnd what we need to do is to make sure we\u2019re focusing on areas where the mutual benefits are very clear.\u201d<\/p>\n Ottawa has withdrawn its retaliatory tariff measures in an effort to restart talks. Washington, meanwhile, is preparing to reopen disputes that cut to the core of the agreement \u2013 dairy quotas, auto content rules, digital regulation and Chinese investment in North America.<\/p>\n Globe economics reporter Mark Rendell writes that the successful renegotiation of the North American free-trade agreement during Donald Trump\u2019s first term, and the President\u2019s decision to exempt USMCA-compliant goods from the harshest tariffs, offer a sliver of hope<\/a>. But there will be months of white-knuckle uncertainty before the trajectory of trade between the two countries becomes clear.<\/p>\n Christopher Hernandez-Roy, deputy director of the Americas program at the Center for Strategic and International Studies in Washington, told The Globe that Canada can still expect a rocky road.<\/p>\n \u201cThe President is very unpredictable, and so like they say in the stock market, past performance is not a prediction of future performance,\u201d he said.<\/p>\n Read more <\/p>\n ChartedA precious pause<\/p>\n This year\u2019s meteoric gold rally has been driven by war, lingering inflationary pressures, erratic U.S. trade policies and President Donald Trump\u2019s attacks on Federal Reserve independence, making the metal a winning hedge against a world turned upside down.<\/p>\n Gold investors now need to brace themselves for what comes next, David Berman writes: Boredom<\/a>! <\/p>\n BookmarkedOn our reading list<\/p>\n In the Prairies: Manitoba sees opportunity in the Port of Churchill. Industry experts aren\u2019t sold<\/a>.<\/p>\n Lying down: Canada\u2019s last waterbed salesmen are still trying to make waves<\/a> in a dozing industry.<\/p>\n On TV: Five uplifting shows<\/a> to help ease the end-of-summer doldrums.<\/p>\n Morning update<\/p>\n