-- With all the focus on Iran in the past month, it's been easy to lose sight of other important files, not the least of which is the USMCA trade deal renegotiations between the United States, Canada and Mexico, said Bank of Montreal (BMO).
U.S. Trade Representative Jamieson Greer made some important remarks on Tuesday, including allowing that "there were some important components" to the deal, but that they may "need separate protocols with Mexico and Canada," noted the bank.
On the timing, Greer indicated that while they will try to accomplish much before July 1, not all issues will likely be resolved by then, so "negotiations could continue after July 1."
That's not surprising, pointed out BMO.
Greer also said that President Donald Trump "intended for USMCA to create more balanced trade with Canada and Mexico" and "that has not happened."
The original USMCA was signed by the three parties in November 2018 and came into force in July 2020. When the deal was signed, the U.S. had a $75 billion bilateral trade gap with Mexico, or 0.4% of U.S. gross domestic product, which has risen to $195 billion in the past year, which is now 0.6% of GDP.
However, for Canada, the bilateral gap has edged up from US$19 billion then, or 0.1% of GDP, to $34 billion now, but that's still a "measly" 0.1% of U.S. GDP, stated BMO.
That imbalance completely disappears when oil is taken out of the calculation, added the bank.