Key Takeaways
- Treasury Secretary Scott Bessent warned Canadian Prime Minister Mark Carney that his comments against U.S. trade policy could backfire during the review of the U.S.-Mexico-Canada Agreement (USMCA)
- Carney had spoken out against economic coercion by great powers on smaller countries at the World Economic Forum in Davos, Switzerland
- President Donald Trump threatened to impose a 100% tariff on goods imported from Canada over a trade deal Carney is pursuing with Beijing
- Bessent advised Carney not to pick a fight with the U.S. to score political points, suggesting it could harm the Canadian people
- The USMCA is a trade deal that protects Canada from the heaviest impacts of Trump’s tariffs, but the president has recently expressed indifference to it
Introduction to the USMCA Dispute
The relationship between the United States and Canada has become increasingly strained in recent days, with Treasury Secretary Scott Bessent warning Canadian Prime Minister Mark Carney that his public comments against U.S. trade policy could have negative consequences. The warning comes as the two countries prepare for a formal review of the U.S.-Mexico-Canada Agreement (USMCA), a trade deal that has protected Canada from the worst effects of President Donald Trump’s tariffs. Carney had used a high-profile speech at the World Economic Forum in Davos, Switzerland to condemn economic coercion by great powers on smaller countries, which was seen as a criticism of the U.S. approach to trade.
The Davos Speech and Its Aftermath
Carney’s speech in Davos sparked a heated exchange with Trump and Bessent, with the president threatening to impose a 100% tariff on goods imported from Canada over a trade deal Carney is pursuing with Beijing. Bessent advised Carney not to pick a fight with the U.S. to score political points, suggesting that it could harm the Canadian people. "I would not pick a fight going into USMCA to score some cheap political points — either you’re working for your own political career or you’re working for the Canadian people," Bessent said during a CNBC interview. This statement highlights the tension between the two countries and the challenges that Carney faces in navigating the complex trade landscape.
The Response from Carney and Trump
Despite Bessent’s warning, Carney stood by his comments, telling reporters that he meant what he said in Davos. "To be absolutely clear, and I said this to the president, I meant what I said in Davos," Carney said. This response suggests that Carney is not backing down from his criticism of U.S. trade policy, despite the potential risks to the USMCA. Trump, on the other hand, has expressed indifference to the USMCA, saying earlier this month that "I don’t really care about it." This statement has raised concerns about the future of the trade deal and the potential consequences for Canada and other countries involved.
The Future of the USMCA
The USMCA was signed in 2020 during Trump’s first term, but its future is now uncertain. Bessent has suggested that the U.S. will eventually end up in a good place, but acknowledged that the path forward may not be straightforward. "I think we will end up in a good place — may not be a straight line," Bessent said during his CNBC appearance. This statement highlights the challenges and uncertainties surrounding the USMCA, and the need for careful negotiation and diplomacy to resolve the current disputes. As the review of the USMCA approaches, it remains to be seen how the tensions between the U.S. and Canada will be resolved, and what the consequences will be for the trade deal and the countries involved.
The Role of Politics in Trade Policy
The dispute between the U.S. and Canada highlights the complex interplay between politics and trade policy. Bessent’s warning to Carney not to pick a fight with the U.S. to score political points suggests that political considerations are playing a significant role in the current tensions. Carney’s background as a central banker has also been cited as a factor, with Bessent suggesting that technocrats who try to pivot and become politicians often struggle. "I’ve seen what happens when a technocrat tries to pivot and become a politician," Bessent said. "It never really works out well." This statement highlights the challenges that Carney faces in navigating the complex world of trade policy and politics.
Conclusion
In conclusion, the dispute between the U.S. and Canada over the USMCA highlights the complex and challenging nature of trade policy. The warnings from Bessent to Carney not to pick a fight with the U.S. to score political points, and the response from Carney that he meant what he said in Davos, suggest that the tensions between the two countries are unlikely to be resolved quickly. As the review of the USMCA approaches, it remains to be seen how the disputes will be resolved, and what the consequences will be for the trade deal and the countries involved. One thing is certain, however: the relationship between the U.S. and Canada will be closely watched in the coming days and weeks, as the two countries navigate the complex and challenging world of trade policy.
