How Will the 30-Day Deal Impact North American Trade Dynamics?

The 70-minute bilateral meeting between U.S. President Donald Trump and Canadian Prime Minister Mark Carney on June 16, 2025, at the G7 summit in Kananaskis, Alberta, set a 30-day deadline for a new trade and security agreement, per a Canadian government statement. This commitment, the first concrete timeline for resolving escalating trade tensions, aims to ease Trump’s 50% tariffs on Canadian steel and aluminum, costing Canada $12 billion annually, per the Canadian Chamber of Commerce.

The U.S.-Canada trade relationship, valued at $698.8 billion in 2024 per U.S. Census Bureau data, is pivotal to the $2.5 trillion North American trade bloc, including Mexico under CUSMA.

A deal could restore supply chain stability, particularly in autos, where Canada exported $90 billion to the U.S. in 2024. However, Mexico’s exclusion from talks, facing Trump’s 25% tariffs, risks fragmenting the bloc, per Reuters.

Will Mexico’s Tariff Burden Disrupt Regional Integration?

Mexico, a CUSMA partner, faces economic strain from Trump’s tariffs, projected to cost $20 billion annually, per Mexico’s Economy Ministry. Unlike Canada, which is exempt from Trump’s 10% universal tariffs, Mexico’s auto exports to the U.S., valued at $150 billion in 2024, are vulnerable.

The 30-day U.S.-Canada deal could sideline Mexico, weakening trilateral integration ahead of CUSMA’s 2026 renegotiation. The World Bank estimates a 0.5% GDP loss for Mexico if tariffs persist, disrupting $400 billion in cross-border supply chains.

A U.S.-Canada agreement prioritizing bilateral gains may prompt Mexico to seek alternative partners, like China, which increased trade with Mexico by 10% in 2024, per Bloomberg. This could destabilize North America’s 15% share of global trade, per WTO data.

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How Will Critical Minerals Shape Trade Dynamics?

The deal’s inclusion of security priorities, such as critical mineral supply chains, could redefine North American trade. Canada’s vast lithium and cobalt reserves, vital for AI and EV industries, align with Carney’s G7 push for mineral security, supported by Trump.

A deal could unlock $50 billion in joint U.S.-Canada investments, per Global News, reducing reliance on China’s 60% control of global rare earths. The U.S., importing 80% of its lithium from Canada, could secure $10 billion in annual EV battery production, per the U.S. Department of Energy.

However, Trump’s tariff-driven approach, described as “simple and precise” versus Carney’s “complex” free-trade vision, may limit cooperation if U.S. protectionism prioritizes domestic gains, per Politico.

Did you know?
The 2018 USMCA negotiations, replacing NAFTA, took 13 months and faced multiple breakdowns, costing North America $50 billion in trade disruptions, per the Brookings Institution.

Tariffs Threaten North American Competitiveness

Trump’s tariffs, including a June 4 doubling of steel duties, have raised costs for North American manufacturers, reducing their edge against Asia’s $3 trillion trade bloc. The Peterson Institute estimates tariffs added $5 billion in U.S. consumer costs in 2024, while Canada’s retaliatory measures, suspended in May, hit U.S. exports like lumber by $10 billion.

A deal removing tariffs could boost regional GDP by 0.8%, per Oxford Economics, but Trump’s insistence on tariffs risks a lopsided agreement, favoring U.S. industries like steel over Canada’s auto sector.

Mexico’s potential pivot to BRICS nations, representing 45% of global GDP, could further erode North American unity if the deal excludes trilateral concessions, per the Financial Times.

Bilateral Focus Risks Trilateral Fragmentation

The 30-day timeline, following months of talks and a March breakthrough when Trump began addressing Carney as “prime minister,” signals progress. Canada’s $349.4 billion in U.S. exports and the U.S.’s $349.4 billion to Canada underscore mutual dependence. Yet, the deal’s bilateral focus, excluding Mexico, could unravel CUSMA’s integrated framework, per the Council on Foreign Relations.

Canada’s TSX rose 1.8% post-announcement, but Mexico’s IPC index fell 1.5%, reflecting market concerns. A deal could harmonize $100 billion in cross-border auto trade but risks alienating Mexico, impacting 3 million regional jobs, per the U.S. Chamber of Commerce.