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This is a CBC podcast.
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Our economic relationship with Canada is very, very different than our economic relationship with Mexico. So it makes sense to talk about things separately. As Canada, the US And Mexico get ready to review their free trade agreement. A top trade negotiator says North America's long running three way partnership could be broken up in favor of separate deals. Welcome to youo World Tonight. I'm Susan Bonner. It is Wednesday, December 10, just before 6pm Eastern. Also on the podcast. Yes, you know we are pleased to see this resilience but you know, going forward we continue to expect fairly modest growth. Canada's key interest rate remains unchanged and so do the concerns about the country's economy. Uncertainty, sluggish growth, yet still managing to fend off the effects of a trade war better than anyone expected.
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When Donald Trump signed on to Kuzma in 2020, he called the new North American trade pact a breakthrough. A breakup may be the better term. Tonight, the President's point man on trade is again floating the idea of replacing the agreement with bilateral deals. Katie Simpson has our top story from Washington. Ambassador Greer, thank you so much for coming. Today the top trade official within the Trump administration, U.S. trade Representative Jameson Greer, sat down for an hour long Q and A session in Washington offering the most extensive insight yet into what President Donald Trump wants to happen to Kuzma. The Canada U. S. Mexico trade deal, could it be exited? Yeah, it could be exited. Could it be revised? Yes. Could it be renegotiated? Yes, and all of those things are on the table. The pact is up for review next year and is widely expected to be renegotiated. However, Greer suggested Trump is open to abandoning Kuzma in favor of separate bilateral trade deals with Canada and Mexico. Our economic relationship with Canada is very, very different than our economic relationship with Mexico. The labor situation is different. The import export profile is different. The rule of law is different. Greer's comments were striking enough. The moderator of the event followed up, seeking a clarification. So it sounds like if I could sort of infer what you're saying is that, yeah, we could end up with separately, two rather than one agreement. You could have a couple of protocols attached to the agreement. You could have a replacement. I mean, there are a lot of things that you could do now. While the Trump administration's threats are generally taken seriously by the Canadian government, the president has used this kind of rhetoric in the past as a negotiating tactic, and it could be part of the US Strategy. Heading into the Kuzma Review. Trump wants concessions from Canada and Mexico, changes to the deal in order to promote American interests. More manufacturing at home, better terms that favor American producers, including dairy farmers. This is going to be a year of incredible consequence for Canada, and we don't know how it's going to play out. Eric Miller is the president of a trade consulting firm, the Rideau Potomac Strategy Group. He says there is no way to predict what Trump is going to do in this difficult moment. What happens in the next few months will determine bilateral relations between Canada and the U.S. for the next generation. And so, buckle up. American lawmakers will soon get a better sense of the Trump administration's strategy. It must submit a report to Congress about the deal by January 2, though it's unclear if that report will be made public. If the US Were to pull out of the pact, it could mean even more uncertainty for Canadian businesses, workers, and the economy. Katie Simpson, CBC News, Washington. Canada is weathering the trade war. The question is for how long? The central bank highlighted a resilient economy today after keeping its key lending rate at two and a quarter percent. But the bank's governor is still worried about the next few months. Senior business correspondent Peter Armstrong is in studio. So, Peter, Tiff Macklin says the economy is weak, unemployment is high. Wouldn't those be good reasons for the bank of Canada to cut rates? Yeah. Look, if there's one thing we've had to say over and over again this year, it's that these are not normal times. This is not a normal economic crisis. And so the solutions won't be the same ones that we usually see. Reading through the bank of Canada's decision, the basic argument is that the economy is doing better than expected. So is that enough to keep the bank on the sidelines, as they say. It's enough for now, you know. Yes, things are indeed better than expected. But bank of Canada Governor Tiff Macklem says the overall story that he sees in the Canadian economy is still one defined by weakness. The Canadian economy is going through a difficult structural adjustment that is going to take some time. When you talk to companies, they're being very cautious about their investment plans. They're cautious about their hiring plans. So, yes, we are pleased to see this resilience. But going forward, we continue to expect fairly modest growth. So in the last bank statement, Tiff Macklem repeatedly said monetary policy was at the limits of what it can do. Did anything change? No. His core argument last time was that monetary policy changes to interest rates can't help target specific sectors. They can't help businesses find new markets. They can't reconfigure supply chains. And if you look at where that resilience he was talking about, where that comes from, it's not the sort of stuff that can be bolstered by slightly lower interest rates. Well, where is the resilience coming from? So there's two key parts. One is that new data from Statistics Canada has shown the economy was actually on more solid footing than we thought heading into this trade war. But also the tariff exemptions that we've seen have meant the severe damage in sectors like, say, steel and aluminum, that that hasn't spilled over into the rest of the economy, at least not yet. Okay, now to the markets. They're now betting rates will stay where they are for quite some time. How can they be so sure? Well, the fact is they can't. It's a best guess based on what we've heard from the banks so far. Here's Catherine Judge, senior economist at CIBC Capital Markets. Yeah, so we see the bank of Canada keeping the overnight rate at 2.25% through the end of 2026. Our forecast depends on customer largely getting renewed, but perhaps some sectoral tariffs remaining in place. We do think there's scope for aluminum tariffs to go down or be eliminated. Those are some big ifs, though, if Kuzma gets renewed, if things continue down the road as expected. So obviously a lot of wiggle room left there. Thank you, Peter. You bet. Senior business correspondent Peter Armstrong in Toronto. Trade and the economy have been a big focus on Parliament Hill. Now the House of Commons is about to rise for its winter break. And though the minority Liberals are just two seats shy of a majority, they are struggling to find opposition support to pass their agenda. As Olivia Stefanovic reports, it's unclear if that will change in the new year. Look, it's a minority Parliament. It's functioned well. On his way out of what was likely the last Liberal caucus meeting of the year, Prime Minister Mark Carney held up a Christmas music record gifted to him by one of his MPs as he defended his governing record. We're making progress. We're making progress. Canadians rightly expect us to make a lot more progress. When he became prime minister last March, Carney promised big changes at speeds Canadians didn't think possible. And while his government has, yes, made a series of big announcements, it's only passed a handful of new laws. We have a lot to get done. We have a lot to get through. Cue the blame game. Government House Leader Stephen McKinnon accuses the official opposition of obstructing the government's priorities. It's an amazing thing. The Conservatives have been talking it out every time we bring it up in the House. This government controls the timeline in this Parliament, and it's completely at their feet. Meanwhile, Conservative House leader Andrew Scheer says the Prime Minister is the one responsible. He expects Canadians to have confidence in him to negotiate on behalf of Canada around the world. You can't even do that here in Parliament. Although the situation is still not as bad as last year, when the Trudeau government's legislative agenda grounded to a halt, there are signs of problems. In his first order of business, Carney repealed the consumer carbon price and put a middle class tax cut into effect. But the bill to make those changes, official legislation, hasn't even made it to the Senate. Neither has the government's proposed border security changes, criminal justice reforms, or the bill to implement implement the budget. I look to the Carney government in 2026 to demonstrate that they understand they're in a minority Parliament. Interim NDP leader Don Davies says the Liberals aren't showing a willingness to work across party lines. You can't get anything done, nothing in this House of Commons unless the Liberals have the support of another party. This Parliament still is fragile. It's a minority. Because of that, pollster David Coletto says Carney may look for an opportunity to get a majority in the new year. I'm not personally writing off the idea that come this spring, we might be in another federal election. Carney was elected last spring primarily to deal with US President Donald Trump. So far, the trade war remains far from resolved. Olivia Stefanovic, CBC News, Ottawa.
