• You will note that “metals” are of keen interest to Canada.  That is because Canada relies on imported metal product, rolled steel, aluminum ingots etc., as an outcome of their energy policy.
  • Canada could not/would not promise to stop Chinese steel being transshipped into auto parts & then into the U.S. market.  Why? Because the U.S. requires a strict “melt and pour” rule.
  • Steel and aluminum must be melted and poured in North America to qualify for preferential treatment. This stops Chinese steel from entering Canada, getting light processing, and crossing the border as “North American” content to evade tariffs.
  • Why is this a problem for Canada specifically (not Mexico)?  Well, steel and aluminum cannot be made without coal and gas (heavy carbon emissions), because the core issue is heat (joules) for the melting. You cannot make molten metal from renewable energy, (ie. windmills and solar farms) you need massive heat (oil, gas, coal). It’s simple science, you need joules.
  • Canada’s energy policy, climate change stuff, is about the creation of electricity and non-carbon emissions. They have decarbonized their industry, and as a consequence have disconnected their ability to melt metal. That’s why they import rolled steel and cast aluminum ingots from China.
  • Their choice to decarbonize is exactly why Steel and Aluminum tariffs against Canada are structurally irreconcilable.
  •  ♦ So, what’s going to happen?
  •  .  Think about it, if Canada refuses to reject ‘climate change’ and Canada refuses to accept tariffs, well, there is no option for a USMCA renewal.
  •  Trump is waiting for Canada to announce their retaliatory measures. It doesn’t make sense to wait until Canada announces retaliation and then just go up a notch from 50% to 75%, then they hit again and you go from 75% to 100% etc. etc.
  • It just makes more sense to call it quits, make the announcement and withdraw completely from the USMCA.  That would tell Carney the six-month clock is now ticking.  Then go back and finish a bilateral agreement with Mexico.
  • Eventually the reality will set in for Canada, and the collapse of the Canadian dollar (CAD) will begin as predicted by the Bank of Canada. 
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  • As a consequence, when Canada crawls back to the table for their bilateral discussion, they will end up with the exact terms they just rejected.