U.S. trade official cites China ties as reason for blocking CUSMA renewal

The United States is refusing to renew the Canada-U.S.-Mexico Agreement on free trade (CUSMA) in its current form, with Washington's top trade official pointing to Canada's deepening economic ties with China as a key concern.

U.S. Trade Representative Jamieson Greer said on Thursday that the White House worries Beijing could use Canada as a back door into the American market. "What I don't want is a situation where Canada is bringing in a lot of Chinese investment and Chinese cars and sending them into America," Greer said in Washington, D.C. "That is actually totally at odds with what we're trying to do."

The Trump administration declined Wednesday to renew the trilateral pact for a new 16-year term, citing "shortcomings" and "trade deficits." The decision does not kill CUSMA—rather, it triggers annual reviews until possible expiration in 2036. Tariff-free access remains for most Canadian exports, and the pact can be renewed for 16 years at any time over the next decade.

Ottawa has pursued closer ties with China in recent months as part of an effort to reduce reliance on the U.S. In January, Canada and China signed an agreement in which Beijing dropped tariffs on agricultural goods in exchange for Canada allowing 49,000 Chinese-made electric vehicles into the Canadian market. First shipments arrived in May.

Greer also pointed to Canada's dairy supply management system and attempts to tax the U.S. digital sector as trade irritants. International trade lawyer John Boscariol said the U.S. is pushing hard on tightening "rules of origin" under CUSMA to ensure China cannot use Mexico or Canada as a back door to the American marketplace.

Canada-U.S. Trade Minister Dominic LeBlanc said after a virtual meeting with Greer that he "reaffirmed Canada's unwavering support for the CUSMA and its renewal." "At a time of global economic uncertainty, Canada is a stable, reliable and trusted partner," LeBlanc said.