In the three and a half years since the signing of the Canada-United States-Mexico Agreement — known as CUSMA in Canada and USMCA south of the border — tense exchanges between Canadian and U.S. trade reps have given way to dinner invitations and good-natured ribbing over the order of the letters in the deal’s abbreviation.
At a chummy press conference May 5, Canada’s trade minister, Mary Ng, and U.S. Trade Representative Katherine Tai pledged to deepen Canada-U.S. automotive ties and cooperate on the critical battery minerals going into a growing number of electric vehicles.
The event was part of Tai’s two-day sojourn in Ottawa and Toronto, her first official trip to Canada since becoming U.S. trade representative in March 2021. The visit broke little new ground but highlighted the sense of mutual goodwill long missing between Ottawa and Washington.
“In a [trade] relationship as large as the one between Canada and the United States, of course there are going to be issues,” Ng said. “The question really is how are you going to work on those issues together.”
Some touchy subjects were discussed, said Tai, but she made no secret about the mutual benefits of the relationship.
“In the context of North America, it is very clear that the success of your economy, your workers, mean success for our economy and our workers and vice versa.”
But there is reason to be skeptical that the newfound amiability and commitment to shared goals will last, particularly when it comes to automotive.
The Biden administration already has a suspect record on the file. Last fall, it proposed an incentive worth up to US $12,500 for U.S. consumers buying U.S.-made EVs. In December, it was a dissenting Democratic senator, not Canadian or international criticism of the flagrant protectionist bent of the legislation, that doomed the bill.
Asked May 5 how Biden’s Buy American approach affects Canadian companies selling products in the United States, Tai said the president only advocates for Buy American on government procurement.
“I wouldn’t characterize that championship by President Biden as a barrier that the administration is throwing into the U.S.-Canada trade relationship,” she said in Ottawa.
Canadian officials and auto lobbyists who spent much of last fall pressuring lawmakers and industry actors in the United States to drop the EV incentive are bound to disagree. At the time, insiders such as Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, characterized the policy as worse for North America’s integrated auto industry than anything seen previously under the Donald Trump administration.
Another gulf opened in January when Canada signed onto a trade challenge over how the United States interprets auto content requirements under the USMCA. Mexico, the third member of the trade pact, is leading the ongoing challenge.
Canada’s Ng is looking past these sore spots, focusing on strengthening the auto industry’s highly integrated supply chain as the sector shifts to EVs.
“The future of the automobile is electric, and we’re going to be working with the United States on this,” she said.
Tai signaled an equally collaborative tone. But if the Biden administration’s first year in office is any indication, Canada’s automotive industry has not seen the last of Washington’s Buy American bias.