U.S. industry groups strongly back renewing CUSMA

As Canada’s merchandise trade with the U.S. And united mexican states faces a important critique, many U.S. Industries are urging the Trump administration to preserve the agreement and to stop putting tariffs on imports from its northern and southern neighbours.

Public hearings are scheduled this week in Washington as part of a mandatory review of the Canada-U.S.-Mexico Agreement (CUSMA).

Ahead of the hearings, some of the heaviest hitters in the U.S. Manufacturing, industrial and retail sectors have submitted briefs extolling the agreement’s benefits to the domestic economy and praising U.S. President Donald Trump for having landed the trade deal during his first term. 

While there are calls for amendments among the roughly 1,500 public comments submitted to the Office of the U.S. Trade Representative, the three-way agreement gets widespread, even enthusiastic support from major industry groups. 

CUSMA is "the most pro-U.S. Manufacturing trade agreement in history,” gushes the submission from the National Association of Manufacturers, the largest organization in a sector that contributes $2.9 trillion US to the nation’s GDP. 

The deal has "boosted manufacturing in the U.S. To unparalleled levels,” it says, calling CUSMA a "core driver” of the domestic industry’s global competitiveness.

The manufacturers' group describes the trade deal as a "key part" of Trump’s agenda of boosting factory production in the U.S. 

"And it has delivered results."

"It's very careful and polite, but it's overwhelmingly in support of, or asking for renewal of CUSMA, with as much elimination of tariffs as possible," said Karaguesian, formerly a special adviser on international trade with Canada’s Department of Finance, now a visiting lecturer in economics at McGill University in Montreal. 

Karaguesian says industry groups are making the case to the Trump administration that Canadian and Mexican supplies are integral to their operations and that the two countries’ markets are important to the success of their businesses. 

"The government of Canada has hundreds of small-, medium- and large-scale private sector allies," he said.

Some submissions, most notably from the U.S. Steel and dairy sectors, are critical of the impact of CUSMA.  

But plaudits for the trade deal — and for scrapping the tariffs that Trump has imposed on Canadian goods — come from a wide range of major industries. 

CUSMA has "provided numerous benefits to the signatory countries and to America’s homebuilders specifically,” according to the National Association of Home Builders, representing 140,000 members in the residential construction industry. 

Its submission calls on the Trump administration to scrap all tariffs on building material imported from Canada and Mexico, including Canadian softwood lumber, which it says "fills a unique niche in residential construction that is not easily replaced with domestic sources.”

“America needs more housing that is more affordable for more people; reducing the cost of building materials by eliminating tariffs is one way to make progress towards that goal.”

Likewise, the trade deal is “essential to the U.S. Auto industry’s competitiveness” and delivers “important benefits for American workers and customers,” according to the submission from General Motors. 

Since the deal was finalized, it says, "GM has made massive investments in North America, including more than $60 billion in the U.S."

The submission also emphasizes how the trade deal boosts its ability to compete with Japanese, European and Chinese automakers.  

Ford calls CUSMA “a cornerstone for attracting investment, creating jobs, and expanding the domestic manufacturing base in the U.S. Automotive sector.” 

Ford also urges the Trump administration to exempt Canada and Mexico from all “section 232” tariffs targeting specific industrial sectors, such as the 50 per cent tariff currently hitting steel and aluminum imports. 

The American Automotive Policy Council, which speaks collectively for Ford, GM and Stellantis, says CUSMA is “without question the most important and impactful trade agreement” for its members, enabling tens of billions of dollars in annual savings.   

According to the National Retail Federation, the trade deal "has operated effectively, overall, since its creation, [and] benefited American consumers, suppliers and the competitiveness," in North America.

The group — representing a sector that contributes $5.3 trillion US to the GDP and 55 million jobs — says in its submission that its members do not want “a whole-sale rewrite or renegotiation of the agreement” and want to avoid what it calls a three-way trade war. 

Consumer Brands Association, representing the biggest U.S. Makers of food, beverage, household and personal care goods, also calls for a renewal. 

“It is an enduring testament to President Trump’s success in negotiating a gold-standard agreement in his first term that U.S. Manufacturers strongly believe in continuing the comprehensive, trilateral approach,” says the association. 

What’s unclear is how much influence the chorus of support for CUSMA will have on a president who, despite having negotiated this very deal in his first term, has soured on it in his second. 

Karaguesian says he believes the Trump administration wants to dismantle CUSMA despite domestic support for the deal. 

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“There's a ton of interests in the Midwest and the farming states in Trump's political base that are asking for continuation of free trade with both Canada and Mexico,” Karaguesian said. 

“I don't think this will stop [the Trump administration's] plan, but they will have to take some of these interests into account.” 

The submissions and this week’s public hearings feed into the U.S. Government’s preparations for the formal three-way review of CUSMA that’s due to start July 1, six years since the agreement took effect. 

The review could result in anything from a deal extending the agreement for up to 16 years, to a hard-headed renegotiation of its key terms, or even one of the countries giving six months’ notice that it’s withdrawing from CUSMA entirely. 

The most likely scenario, according to an analysis by the Center for Strategic and International Studies (CSIS), a think-tank in Washington, is that at least one country refuses to agree to an extension during the one-year time frame allotted to the review. 

That would trigger repeated annual reviews of the deal, something the CSIS says would “damage investor confidence and long-term investment.”    

Correspondent

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