Canada and US resume trade talks after months-long pause

Canada's minister for US-Canada trade, Dominic LeBlanc, is in Washington on Friday for meetings with Trump administration officials — the first high-level talks between the two countries since negotiations broke down late last year.

LeBlanc will be meeting with US trade representative Jamieson Greer to discuss the US-Canada-Mexico free trade agreement, also known as the USMCA, which is under a mandatory review this year, his office said.

Formal trade talks between Canada and the US were suspended in October by President Donald Trump over an anti-tariff advert run by the province of Ontario.

Trump has since mulled scrapping the USMCA, or carving out separate deals with Canada and Mexico.

Canada and Mexico, however, have both said that they would like the long-standing North American free trade agreement to remain in place.

"This government is very worried about the future of the bilateral relationship with the United States, the consequences of a zombie CUSMA or the shredding of CUSMA," said Prime Minister Mark Carney this week, using the Canadian term for the USMCA.

Carney added that the free trade agreement "effectively has been broken in the short term by US actions".

The USMCA has shielded the majority of Canada's trade from broad tariffs Trump has imposed on Canada, including a new worldwide 10% duty brought in under a never-used law known as Section 122.

That was imposed after the US Supreme Court struck down duties, including some on Canada, brought in by Trump under presidential emergency powers.

Still, separate - and painful - sector-specific tariffs he has imposed on Canadian steel, aluminium and automobiles remain in place. Before talks broke down last autumn, Ottawa was working to secure some relief on that front.

In recent weeks, both Canadian and US officials have said that some baseline tariffs will likely remain no matter the outcome of the USMCA review.

Meanwhile, US and Mexican negotiators will hold bilateral discussions over the joint review starting later this March, according to Greer's office.

LeBlanc's meeting with Greer on Friday comes as Carney wraps up a tour of the Indo-Pacific, where he met his counterparts in India, Australia and Japan to discuss trade and investment in Canada.

On his last stop in Tokyo, Carney signed a new strategic partnership with Japanese Prime Minister Sanae Takaichi, which would deepen ties between the two on defence, energy and technology.

Japan, however, has said that its continued support for Canada's auto sector hinges on successful talks on the future of the USMCA, which has provided Japanese car makers with preferential access to the US market.

Around 70% of cars manufactured in Canada are made by Japanese companies, according to figures provided by Carney's office.

"All those cars made in Canada, of course sold in Canada, but at the same time exported to the US market," said Japan's ambassador to Canada Kanji Yamanouchi, in an interview with CTV News.

The automotive industry has been a sticking issue for US officials, who have said in the past that they want car manufacturing to shift completely to the US.

Under the USMCA, cars are manufactured in all three North American countries, and the deeply linked supply chain sees a single vehicle crossing the US, Mexico and Canada borders multiple times before it is finished and sold.

US tariffs on Canada's auto sector, which is concentrated in Ontario, have already led to thousands of job losses.

Carney was elected last year on a platform that included reducing Canada's economic reliance on the US, which he no longer views as a reliable trade partner.

For years, Canada sold around 75% of its products to the US, though that number has dropped to 67.3% as of October.

During his Indo-Pacific trip this week, Carney signed deals worth billions of dollars with India, including a 10-year nuclear energy pact. The two also agreed to fast-track talks on a free trade deal.

In Australia, Carney and Prime Minister Anthony Albanese announced measures to deepen defence and security ties.

They added that Australia will be joining the G7 critical minerals production alliance, which has been led by Canada.