The United States’ chief trade negotiator has pointed directly at Canada’s deepening economic ties with China as a key reason the North American free trade agreement was not renewed this week, warning that Chinese cars and investment flowing through Canada into American markets is flatly incompatible with U.S. trade goals.
Jamieson Greer, the U.S. Trade Representative, singled out Ottawa’s deal with Beijing which significantly reduced Canadian tariffs on Chinese electric vehicles as a flashpoint in already strained trade relations.
“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 told Global News in Washington on July 2. “That is actually totally at odds with what we’re trying to do.”
The comments came a day after Greer met virtually with Canada-U.S. Trade Minister Dominic LeBlanc and Mexico’s Economy Secretary Marcelo Ebrard for the scheduled July 1 review of the Canada-United States-Mexico Agreement, known as CUSMA.
Both Canada and Mexico entered the talks hoping to lock in a renewal of the agreement for another 16 years. Instead, Greer’s office announced it opposes renewal “in its current form,” citing the deal’s unresolved “shortcomings” and persistent trade deficits with both neighbors.
Without a formal renewal, CUSMA remains in effect under annual review provisions until 2036, with the possibility of extension or early termination if any party gives six months’ notice.
At the heart of Washington’s frustration is a deal Prime Minister Mark Carney struck during a visit to Beijing in January. Under that agreement, Canada slashed its 100 percent tariff on Chinese electric vehicles down to 6.1 percent on a quota of roughly 279,000 units spread over five years.
In return, China agreed to ease tariffs on Canadian agricultural and seafood exports though some concessions are set to expire as early as the end of 2026. Notably, Beijing still imposed a 73.5 percent tariff on Canadian pea starch effective July 1, suggesting the goodwill has its limits.
U.S. President Donald Trump reacted sharply when the deal was announced, declaring that Canada is “systematically destroying itself” and calling the China arrangement one of “the worst deals, of any kind, in history.”
At last month’s G7 Summit in France, Carney was caught on a hot mic telling Trump that Canada was only importing 49,000 Chinese EVs representing less than three percent of the market. Carney later told reporters he had been walking the president through the deal’s mechanics and that Trump “likes the structure.”
Beyond the EV tariff reduction, the Carney government is actively courting Chinese automakers to set up manufacturing in Canada. Two cabinet ministers have held meetings with Chinese car companies in recent weeks, and Industry Minister Mélanie Joly returned from a mid-June trip to China with word that four automakers are interested in exploring joint ventures on Canadian soil.
Joly outlined four conditions any such partnership would need to meet: majority Canadian ownership, Canadian-level labour standards, local supply chains, and robust safeguards around software and data security.
Industry groups have pushed back hard. Critics say importing Chinese vehicles threatens both domestic jobs and national security, pointing out that modern cars are packed with internet-connected sensors and that Chinese companies are legally required to cooperate with state intelligence gathering.
Greer’s objections extend beyond the China file. He told U.S. lawmakers in April that the economic models of the two countries “don’t fit together very well,” accusing Canada of doubling down on globalization while Washington is actively trying to course-correct away from it.
The U.S. also has long-simmering disputes with Canada over its supply management system for dairy and poultry, as well as digital services taxes targeting American technology companies.
On the digital tax front, Canada has made some concessions. Ottawa pledged to scrap its Digital Services Tax last June to help facilitate negotiations, and fully repealed it in March. More recently, the Carney government pressured broadcast regulator CRTC to revisit its decision to triple levies on major streaming platforms like Amazon and Netflix a move made the day after LeBlanc met Greer in Washington in early June.
“We have seen the Canadians threaten some actions on digital. They’ve paused on that for a variety of reasons. Obviously, that’s good it’s good not to do something you shouldn’t have done to begin with,” Greer said.
Despite the impasse, Canadian officials are projecting confidence. LeBlanc said Canada gives its “unwavering support” to CUSMA and is approaching talks “from a position of strength,” with the goal of preserving what he called one of the most successful trading relationships in the world.
The Carney government has also framed its China outreach as part of a broader trade diversification strategy, aiming to double non-U.S. exports within a decade in response to ongoing American tariffs.
Whether that strategy reassures or further alienates Washington remains the central tension heading into the next round of negotiations.
