Canada trade stance softens as U.S. envoy backs USMCA renewal push

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Canada softens trade stance

Highlights

U.S. ambassador Pete Hoekstra notes Ottawa's recent diplomatic pivot toward supporting USMCA renewal, aligning Canadian rhetoric with Washington's 'fortress North America' priorities.
Hoekstra warns Canadian leaders against retaliation and restrictive export messaging in response to U.S. tariffs, emphasizing that the USMCA does not allow for product bans or exclusion of American bidders from provincial contracts.
The USMCA impacts C$1.3 trillion ($933 billion) in annual bilateral trade and shields Canadian exports from tariffs, but Trump threatens not to renew the deal, risking protracted negotiations.

Diplomatic shift ahead of trade deadline

As reported by the Financial Times, U.S. ambassador to Canada Pete Hoekstra says he is encouraged by what Washington sees as a pivot in Prime Minister Mark Carney's approach to the bilateral relationship. Hoekstra tells the newspaper that recent comments from Carney, Conservative leader Pierre Poilievre and Ontario premier Doug Ford increasingly stress the importance of economic ties between the two countries.

Hoekstra says Ottawa is working to make Canada part of a broader “fortress North America” strategy, a message that aligns more closely with U.S. priorities after earlier Canadian criticism of tariffs on cars, steel and aluminium. He says Washington wants to see whether the softer rhetoric becomes a consistent position.

The comments come as Ottawa races to protect the USMCA, the trilateral trade pact agreed in 2020. Trump says on Wednesday that he may not renew the deal, raising the prospect of lengthy negotiations between the U.S., Canada and Mexico.

Pressure on retaliation and export messaging

Hoekstra says Canada still needs to make a stronger case to Trump on the strategic value of commodities such as potash, oil and gas. He also warns Canadian leaders against retaliation measures tied to U.S. tariffs, including boycotts of American goods and restrictions on U.S. companies seeking provincial contracts.

In remarks that appear directed at Ford, Hoekstra says the agreement does not provide for product bans or the exclusion of American bidders from provincial business. He also criticises public campaigns in Canada discouraging travel or purchases linked to the U.S., saying similar rhetoric is not coming from American governors or senators.

The USMCA covers about C$1.3 trillion, or U.S.$933 billion, in annual Canada-U.S. trade in goods and services and shields a large share of Canadian exports from Trump's tariffs. Canada's ambassador to the U.S., Mark Wiseman, also adopts a conciliatory tone, saying Trump's America-first agenda does not mean America alone and that Canadians need to keep reminding Americans of Canada's importance to the U.S. economy.

In our earlier USD/CAD analysis, we noted the pair was holding a bullish bias as the Bank of Canada kept its policy rate unchanged at 2.25%, preserving the rate differential with the U.S. dollar. The report highlighted strong upside momentum but also warned that overbought signals could lead to near-term consolidation within a defined trading range. Overall, it framed USD/CAD as supported by both macro conditions and technical structure, with key support levels acting as the main line in the sand.

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