As the Canada-United States-Mexico Agreement (CUSMA) approaches its next joint review in 2026, the economic relationship between Canada and the U.S. is under scrutiny, particularly in light of the upcoming presidential election on November 5, 2024. CUSMA, which replaced NAFTA in March 2020, plays a crucial role in the economic dynamics of North America, with Canada, the U.S., and Mexico accounting for nearly a third of global GDP [e5c3f471].
Recent analyses indicate that the renegotiation of CUSMA primarily benefits the United States, potentially leading to a 'regulatory chill' in Canada and Mexico due to fears of U.S. retaliation [24e41eb6]. The Canadian Chamber of Commerce has warned that bipartisan 'Buy American' policies could threaten the integrity of CUSMA, with a potential 10% tariff on Canadian goods projected to reduce Canadian productivity by nearly 1% and cost individuals approximately $1,100 in real income [e5c3f471].
In early October 2024, NAM President and CEO Jay Timmons led a delegation to Mexico City, emphasizing the importance of protecting investor holdings to enhance North American manufacturing competitiveness. Meetings included discussions with Deputy Trade Minister Luis Rosendo GutiƩrrez and various trade associations, where the need for robust protections under USMCA was highlighted to help North American manufacturing outcompete China [794b50df].
The trade relationship between Mexico and China is significant, with Chinese investments in Mexico totaling approximately $2 billion since 2018, while U.S. investment in Mexico stands at $207 billion. This dynamic underscores the importance of the upcoming USMCA joint review, which will address challenges such as cybersecurity and labor rights [b386370d].
Canadian businesses are urging their government to prepare strategically for the renegotiation, emphasizing the need for concessions to protect their interests. The Business Council of Canada has specifically called for the revocation of a new digital services tax (DST), which they believe could sour U.S.-Canada relations. The Office of the United States Trade Representative (USTR) claims that the DST breaches CUSMA commitments, raising concerns about potential retaliatory tariffs that could harm Canadian exports [e5c3f471].
U.S. Senator John Thune has been vocal about the necessity of free trade agreements, particularly as the U.S. agricultural trade deficit is projected to reach a record $30.5 billion in 2024. He criticizes the Biden Administration for not committing to new free trade agreements since taking office and emphasizes the importance of international trade for states like South Dakota, where about 20% of jobs depend on trade [eae515f3]. Thune advocates for negotiations with the United Kingdom and hopes to return to the Trans-Pacific Partnership, believing that access to global markets is crucial for the U.S. agricultural industry.
In addition to advocating for trade agreements, Thune stresses the need for American leadership on the global stage, particularly in confronting malign actors like Iran, Russia, and China. He highlights the implications of withdrawing support for Ukraine and the importance of maintaining a strong economy to reduce dependence on hostile nations [1f5c4c45]. Thune's comments come amid rising concerns about border security and illegal migration, with proposals from Senators Graham, Lankford, and Cotton aimed at addressing these issues.
Senator Chuck Grassley of Iowa also reflects on the importance of American values and citizenship, urging gratitude for the country's agricultural abundance and the sacrifices of military veterans. He acknowledges the rising costs of Thanksgiving groceries and calls for responsible federal budgeting [1f5c4c45].
President Biden is noted for being the first U.S. president since Jimmy Carter to neither negotiate nor sign a free trade agreement, marking a significant shift in U.S. trade policy. The pursuit of freer trade has been a bipartisan effort for over three decades, with previous administrations engaging in various agreements that shaped the global trade landscape. However, the current political climate has led to differing priorities between Republicans and Democrats regarding trade agreements, complicating the future of U.S. trade relations [981a4dd0].
Additionally, NAM and its allies have urged the D.C. Circuit Court to vacate the EPA's PFAS rule, citing flawed analyses and exceeding statutory authority. The ongoing Boeing strike, now in its 20th day, could lead to a $1.65 billion regional economic loss, prompting manufacturers to advocate for immediate restoration of R&D expensing to enhance innovation and competitiveness. Key lawmakers, including Sen. Todd Young and Rep. Ron Estes, are pushing for tax reforms to support R&D initiatives [794b50df].