{"id":688690,"date":"2026-05-23T14:26:10","date_gmt":"2026-05-23T14:26:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/688690\/"},"modified":"2026-05-23T14:26:10","modified_gmt":"2026-05-23T14:26:10","slug":"carney-walks-a-tightrope-on-fortress-north-america-as-trade-review-looms","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/688690\/","title":{"rendered":"Carney walks a tightrope on Fortress North America as trade review looms"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

An employee works on the production line at the Martinrea auto parts manufacturing plant, in Woodbridge, Ont. The company’s executive chairman and co-founder Rob Wildeboer expects the U.S. to demand tighter rules of origin for finished vehicles, based on conversations he has had with White House officials.Chris Young\/The Canadian Press<\/p>\n

Prime Minister Mark Carney<\/a> has spent much of the past year warning that Canada\u2019s close economic integration with the United States has become a weakness that must be corrected. Earlier this month, he began to change his tune.<\/p>\n

Speaking to an audience of Liberal<\/a> supporters in Toronto two weeks ago, he said that Canada \u201cremains open to deeper integration\u201d with the United States in certain sectors, \u201cincluding options for Fortress North America.\u201d <\/p>\n

\u201cTo be clear, those offers are on the table,\u201d he said. \u201cIf that route is not ultimately possible, we will invest heavily in new markets and products.\u201d <\/p>\n

This shift in rhetoric \u2013 emphasizing collaboration with the United States first, and trade diversification as Plan B \u2013 is occurring ahead of the six-year review of the United States-Mexico-Canada trade agreement.<\/p>\n

U.S. and Mexican officials are meeting next week in Mexico City for the first formal round of USMCA<\/a> talks \u2013 notably without Canada at the table. The official review date is scheduled for July 1, but all three countries have said they expect negotiations to continue past that date. <\/p>\n

The Trump administration has made it clear that it sees the review as an opportunity to tighten North American supply chains for key industrial goods and tilt the rules of continental trade further in favour of U.S. companies.<\/p>\n

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In practice, that means stricter content rules for a range of products, beyond just automobiles, and more alignment from Canada and Mexico on efforts to exclude Chinese and other low-cost Asian parts from manufacturing supply chains.<\/p>\n

\u201cIf you\u2019re going to get a special deal on trade with the United States of America, \u2060we want to make sure that there\u2019s U.S. content in that,\u201d United States Trade Representative Jamieson Greer, Washington\u2019s top trade official, said Friday,<\/p>\n

These demands put Ottawa in a tricky position. Key Canadian industries, including vehicle, auto parts and steel manufacturing, have said they would accept or even welcome tighter rules of origin, which define how much of a product must be sourced from inside North America to get preferential tariff<\/a> treatment.<\/p>\n

But in exchange they want Washington to drop, or at least lower, its devastating sectoral tariffs, known as Section 232 tariffs. And it\u2019s not clear how much this trade-off is actually on the table.<\/p>\n

Talks between Ottawa and Washington about lowering Section 232 tariffs on steel and aluminum broke down last fall and remain on ice. <\/p>\n

And while Mr. Greer has spoken about the importance of bringing U.S. supply chains back to the Western Hemisphere, President Donald Trump<\/a> has offered a narrower vision of Fortress America, not Fortress North America \u2013 insisting, for instance, that U.S. consumers should not be buying cars made in Canada and Mexico. <\/p>\n

Mr. Carney, himself, is on a high wire. <\/p>\n

He\u2019s built a political brand around the idea of a \u201crupture\u201d with the United States and spent a year trying to reorient parts of Canada\u2019s industrial base toward domestic and overseas markets. That\u2019s gone as far as inviting Chinese electric vehicles onto Canadian streets and Chinese investment into the Canadian auto sector. <\/p>\n

But now to preserve a deal that underpins so much of Canada\u2019s prosperity, he\u2019s signalling an openness to pivoting back in the other direction and into the embrace of the continental market, even if it\u2019s skewed further in favour of U.S. companies over Canadian ones. <\/p>\n

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The possibility that complicated rules of origin could be expanded beyond the auto sector is already making the business community nervous, said Brad Wood, senior director for trade and innovation policy at the U.S. National Foreign Trade Council.Yuki Iwamura\/The Associated Press<\/p>\n

It\u2019s unclear how long this ambiguity can be maintained, especially if Washington cuts a deal with Mexico City in the coming months that lowers Section 232 tariffs on Mexican automobiles and metals in return for increased collaboration on U.S. economic priorities, leaving Ottawa on the sidelines. <\/p>\n

\u201cI think the Fortress North America rhetoric and approach is going to lead to minor aneurysms in Brussels and New Delhi and Beijing,\u201d said Kip Eideberg, senior vice-president of government and industry relations at the Association of Equipment Manufacturers, which represents both Canadian and U.S. companies.<\/p>\n

\u201cBut if erecting a wall around the North American market against enemies, real and imagined, is what it takes to get this done, then I think that is what\u2019s needed,\u201d he said.<\/p>\n

So far, Mexico has been much more willing to bet on deeper integration with its mercurial neighbour \u2013 despite significant Chinese investment in the country\u2019s manufacturing base, and long-standing concerns in Washington that Mexico is a \u201cback door\u201d for Chinese goods to enter the U.S. without paying tariffs.<\/p>\n

Over the past year, Mexico has offered concessions to Washington on a range of bilateral irritants and taken steps to reduce Asian imports, raising tariffs on some 1,400 goods from countries with which it does not have a trade agreement and suspending hundreds of steel import licences. <\/p>\n

This is partly Mexico playing catch-up with Canada and the U.S., which have taken a stricter approach to metal imports and investment screening. But Mexican President Claudia Sheinbaum is also betting that her country, with its low-cost manufacturing base, could be the key beneficiary of efforts to shift U.S. supply chains away from Asia.<\/p>\n

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\u201cWhen you go and see the Mexican industrial plan, the so-called Plan M\u00e9xico, it is perfectly aligned with what Donald Trump wants for the United States and for the region. We\u2019re talking about import-substitution, we\u2019re talking about heavily re-industrializing the country, moving away from China,\u201d said Pedro Casas Alatriste, chief executive of the American Chamber of Commerce of Mexico.<\/p>\n

\u201cEven though each country is framing it on a nationalistic view, curiously enough, they complement each other.\u201d<\/p>\n

This alignment, alongside a good personal relationship between Mr. Trump and Ms. Sheinbaum and collaboration on issues like drug cartels and immigration, has helped move along bilateral trade talks between Washington and Mexico City. <\/p>\n

\u201cIt could be a situation where the U.S. and Mexico advance a number of changes to the treaty on a bilateral basis and come to consensus on some of these issues, and then approach Canada after the fact with some of these changes to the USMCA on a take-it-or-leave-it basis,\u201d said Patrick Childress, a partner with the U.S. law firm Holland & Knight and a former assistant general counsel at the Office of the U.S. Trade Representative (USTR).<\/p>\n

\u201cThis is a challenging position for Canada to be in at the moment, because potentially changes to the treaty are being negotiated and [Ottawa is] not at the table. That\u2019s not a good position to be in from a negotiating standpoint.\u201d<\/p>\n

It remains unclear exactly what\u2019s on the table, but industry representatives are picking up clues.<\/p>\n

Mr. Casas Alatriste said USTR is focusing discussions on seven or eight key sectors, where the U.S. wants to reshore or regionalize supply chains through tighter rules of origin and various tariff measures. These include autos, steel, aluminum, semiconductors, medical devices, pharmaceuticals and critical minerals \u2013 all sectors that have been subject to Section 232 national-security investigations.<\/p>\n<\/p>\n

The possibility that complicated rules of origin could be expanded beyond the auto sector is already making the business community nervous, said Brad Wood, senior director for trade and innovation policy at the U.S. National Foreign Trade Council. A dozen auto companies were involved in rules-of-origin discussions during the USMCA negotiations in Mr. Trump\u2019s first term, he said.<\/p>\n

\u201cIf changes to rules of origin are negotiated in other sectors, you are potentially expanding the impact to hundreds or thousands of companies, which all have their own diverse supply chains, increasing the risk of unintended consequences,\u201d Mr. Wood said.<\/p>\n

When it comes to automobiles \u2013 the continent\u2019s most important and integrated manufacturing industry \u2013 the U.S. is expected to renew its push for higher regional content requirements, and perhaps U.S.-specific content requirements, said Flavio Volpe, president of the Automotive Parts Manufacturers\u2019 Association.<\/p>\n

In the 2017 to 2019 negotiations that created the USMCA to replace NAFTA, Washington demanded that 85 per cent of the core of a vehicle must be from North America, up from 62.5 per cent. And it demanded that half of the content come specifically from the United States.<\/p>\n

After pushback from Canada, Mexico and the auto industry, the USMCA landed on a 75-per-cent regional value content requirement. It also included a new rule that 40 per cent of the value of the car must come from factories where workers make at least US$16 an hour, which would exclude most Mexican factories.<\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Pierre Cuguen, a spokesperson for the Privy Council Office, said Ottawa sees energy, steel, aluminum, softwood lumber, agriculture and the automotive sector as industries with potential for deeper economic integration with the U.S.Chris Young\/The Canadian Press<\/p>\n

Rob Wildeboer, executive chairman and co-founder of Canadian auto-parts-maker Martinrea International, said he expects the U.S. to demand tighter rules of origin for finished vehicles, based on conversations he has had with White House officials. But this might be done by changing how you calculate the 75-per-cent content rather than by raising the number itself, he said.<\/p>\n

Crucially, he expects the U.S. to increase the cost of non-compliance with the USMCA through some combination of tariff measures. Here, the aim is to avoid what happened after the USMCA came into force in 2020, when a number of auto companies chose to pay a low baseline tariff of 2.5 per cent rather than comply with the USMCA\u2019s stricter rules of origin.<\/p>\n

Tighter regional content requirements for autos are actually beneficial for auto-parts companies like Martinrea, Mr. Wildeboer said. \u201cIt forces your customers to basically source from North America and it forces those international guys to come here to use North American-based suppliers.\u201d <\/p>\n

The story is different for the car manufacturers themselves.<\/p>\n

\u201cWe\u2019ve only had this current agreement in force for almost six years. And that was a big compliance burden on companies to come into compliance with and to adjust to it,\u201d said Brian Kingston, CEO of the Canadian Vehicle Manufacturers\u2019 Association, which represents Ford, General Motors and Stellantis in Canada. \u201cAny changes to rules of origin can\u2019t happen overnight and they have to be based on the realities of our existing supply chains.\u201d<\/p>\n

One area consistently mentioned in conversations about Fortress North America is critical minerals.<\/p>\n

China currently dominates the mining and refining of rare earths and a range of other minerals that are essential for defence and other advanced manufacturing. Canada has pitched itself as a safe and more secure alternative.<\/p>\n

It\u2019s not clear, however, what kind of offers of preferential access Ottawa might promise to Washington as part of a Fortress North America pitch, said Pierre Gratton, CEO of the Mining Association of Canada.<\/p>\n

\u201cAt one level, I could see us welcoming the idea of new sources of potential investment to grow the mining business. On the flip side, there\u2019s also a little bit of wariness of our sector being used as leverage to address other issues. And we don\u2019t want to see ourselves traded in some way, to try to make progress on dairy or softwood lumber, whatever it may be,\u201d Mr. Gratton said.<\/p>\n

Pierre Cuguen, a spokesperson for the Privy Council Office, said the Canadian government sees energy, steel, aluminum, softwood lumber, agriculture and the automotive sector as industries with potential for deeper economic integration with the United States. <\/p>\n

\u201cThe proposals Canada has advanced are serious and substantive, having the potential to generate hundreds of billions of dollars in economic value for American industries and workers in exchange for real relief from the unfair tariffs imposed on Canadian products,\u201d Mr. Cuguen said in a statement. <\/p>\n

\u201cCanada shares the U.S.\u2019s concerns about unfair competition from non-market economies and has taken steps to protect our industries from unfair trade practices, for example in the steel and aluminum sectors. We are prepared to work collaboratively with the U.S. in this regard,\u201d he said. <\/p>\n

Ultimately, the path forward on all these issues remains opaque. <\/p>\n

Discussions about the substance of the USMCA are wrapped up in a broader reassessment of North American collaboration not only in trade, but also in areas such as defence, security, immigration and technology. Movement on one issue can impact the others. <\/p>\n

And trade talks are happening along multiple paths at once. USTR is leading the discussion about changes to the USMCA. But the U.S. Department of Commerce controls the Section 232 tariffs that really matter to Mexico and Canada. <\/p>\n

Sarah Stewart, CEO of the Washington think tank Silverado Policy Accelerator, and a former USTR official, said we could end up in a situation where Washington reaches a \u201creciprocal trade agreement\u201d with Mexico City or Ottawa to lower Section 232 tariffs while continuing to work through the nitty-gritty details of USMCA rules of origin. <\/p>\n

\u201cThese are all things that can coexist. You can have USMCA on a trilateral basis that\u2019s overlaid by bilateral deals or protocols,\u201d Ms. Stewart said. <\/p>\n

The task for Canada is being ready to build Fortress North America if the U.S. is willing, while being prepared to go its own way if the whole edifice comes tumbling down. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: An employee works on the production line at the Martinrea auto parts manufacturing…\n","protected":false},"author":2,"featured_media":688691,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-688690","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/688690","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=688690"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/688690\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/688691"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=688690"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=688690"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=688690"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}