Earlier this month, President Trump discovered the latest leverage point to expand his influence in Canada: a new bridge connecting the country to the United States, expected to open this year.
Mr. Trump threatened to block the opening just hours after the billionaire owner of a rival U.S.-Canada bridge met with Howard Lutnick, Mr. Trump’s commerce minister. It wasn’t that the president was particularly enthusiastic about the new bridge. What excited him, officials familiar with his thinking said, was the possibility of using the bridge to force Canada into trade concessions.
“I will not allow this bridge to open until the United States is fully compensated for everything we have given it and, more importantly, Canada treats the United States with the fairness and respect we deserve,” Trump said on social media on February 9.
The threat was a foretaste of the high-pressure tactics the president is expected to use as his administration renegotiates a trade deal with Canada and Mexico. The agreement between the United States, Mexico and Canada that Mr. Trump signed during his first term in office is scheduled to be reviewed by the summer.
U.S. officials have increased pressure on Canada to give in to their demands on trade and other issues. Mr. Trump’s threat to block the Detroit-Windsor bridge was the latest in a series of flashpoints that Mr. Trump has exploited to anger Canadian Prime Minister Mark Carney. In October, Mr. Trump suspended trade talks over an ad featuring a historic address by President Ronald Reagan denouncing tariffs, paid by the province of Ontario and broadcast in the United States. Mr. Carney apologized.
The Trump administration has a list of things it wants Mr. Carney to concession on, including long-standing grievances about protected industries in Canada, including the dairy sector. Another pressing issue for the U.S. government is the fact that liquor retailers controlled by Ontario and other Canadian provincial governments removed U.S. liquor from their shelves last year in retaliation for Trump’s tariffs on Canada.
Trump administration officials have also been angered by Carney’s global charm offensive to strengthen Canada’s trade ties with other countries, including China. Responding to a modest tariff deal struck by Mr. Carney during a visit to Beijing last month, Mr. Trump threatened to impose 100 percent tariffs on Canadian goods and claimed that China would “take over” Canada and even ban ice hockey.
He also reacted bitterly to Mr. Carney’s speech in Davos, Switzerland, in which he said the era of a U.S.-led world order was over and that middle powers like Canada should band together to defend their interests.
“Canada lives because of the United States,” Trump said the day after Carney’s Davos speech. “Remember that, Mark, the next time you make your statements.”
The disputes have not led to new tariffs, but they form the bitter backdrop against which the two countries begin serious trade talks this year. The text of the USMCA says the review must be completed by July 2026.
Mr. Trump and his advisers have suggested that the three-country pact could be abandoned entirely. Instead, the US could conclude bilateral agreements with Canada and Mexico, the consultants suspect. The White House did not respond to a request for comment.
This could have catastrophic consequences for companies that have structured their business according to the trade agreement. The pact handles trillions of dollars’ worth of trade flows, and leaving the pact could cause pain for American farmers and automakers and hurt U.S. economic growth. Some trade experts and executives believe the idea of abandoning the North American trade agreement is likely a pressure tactic from a president who has abandoned some of his biggest economic threats.
But Mr Trump was dismissive when asked about the future of the agreement. “It has no real benefit – it’s irrelevant,” he said in January. “Canada wants it. They need it.”
The Trump administration has imposed tariffs on Canada and Mexico despite the USMCA. In Canada, these hit important sectors of the economy hard: lumber, cars, steel and aluminum are particularly affected.
However, the current agreement leaves most trade between the U.S. and Canada duty-free, as well as with Mexico. The president last year created sweeping exemptions from his tariffs for goods that comply with USMCA rules. This has led to a rush of companies trading under the pact’s terms and significantly reduced the average U.S. tariff rate.
In an interview with The New York Times in January, Jamieson Greer, the U.S. trade representative, said that the administration wanted to keep things that worked in the agreement but that there was no “natural reason” that USMCA had to be a pact. The United States will discuss energy production, corn sales and labor issues with Mexico, while the main issues with Canada will be dairy, electricity transmission and digital regulation, he said.
“We are not bound to a particular agreement or a particular format of an agreement just because it is there,” Mr. Greer said. He said the administration’s priority is to bring manufacturing jobs to the United States, promote wage growth and reduce the U.S. trade deficit.
“The president has been very clear,” Mr. Greer said in a second interview this month. “He’s half inclined to walk. So we’ll see how that goes.”
Mr. Greer helped negotiate and pass the USMCA through Congress during Mr. Trump’s first term as chief of staff to then-Trade Representative Robert E. Lighthizer. But he is not afraid to change the agreement, people close to him say.
Mr. Greer began pushing for a more disruptive approach to USMCA negotiations last summer, saying the current format wasn’t working for the United States, a person who spoke to him said. One result of this approach could be for the president to withdraw from the agreement and replace it with two separate agreements, the person said.
U.S. officials are unhappy with Canada’s continued protection of its dairy industry, among other concerns. To keep talks on track last year, Mr. Carney dropped Canada’s planned digital services tax, which had been criticized by the United States, but the concession did not appear to advance talks.
The U.S. government has also criticized Mexico for welcoming investment from Chinese factories, which can then export their products to the U.S. under the trade deal’s preferential terms.
The Canadian government is preparing for a break, weighing the financial and political costs of changing domestic policies that protect socially and economically sensitive industries in return for a trade deal with the United States.
Two Canadian officials involved in the U.S. trade talks, who spoke anonymously to openly express their impressions of the status of the talks, said expectations in Ottawa for a full renewal of the USMCA are very low. They said Mr. Carney’s team was even wondering whether it could trust any new trade deals with Mr. Trump.
They said the Canadian government was preparing for long, bumpy and dramatic talks with a hostile U.S. government and even a dissolution of the USMCA. Mr. Trump said repeatedly last year that he wanted Canada to become part of the United States – calling it the 51st nation – and that he was prepared to use “economic force” to force the country to do his bidding.
Mr. Carney was elected last spring on a promise to stand up to Mr. Trump. He said at the time that the president wanted to “break us so America can own us.”
Despite some positive interactions between Mr. Trump and Mr. Carney, Canadian officials said they believed Mr. Trump wanted to weaken Canada economically to force it to abandon some protectionist measures it had maintained in previous trade talks.
In contrast, U.S. officials began meeting with the Mexican government about the trade deal in January, and Mexicans are optimistic.
The divide-and-conquer tactic is nothing new for the Trump administration. During Trump’s first term, as U.S. officials negotiated the USMCA, they also pushed forward negotiations with Mexico while threatening to abandon Canada.
It was Mr. Greer who initiated the strategy. He traveled to Mexico at the beginning of 2018 to hold talks with the Mexicans without Canada’s knowledge, he said in the interview.
The United States went ahead and proposed a bilateral agreement with Mexico and told Canada to join or be expelled. With a minute to go before the deadline for an agreement, Canada forced a concession out of Mr. Greer’s team and made a concession of its own, and an agreement was reached.