North American trade deal at risk as U.S., Canada exchange barbs (axios.com)

The trade pact that binds North America is quietly under the most strain since its inception, risking a break in one of the world's most integrated manufacturing economies. Why it matters: A joint review of the signature Trump 1.0 trade agreement — the U.S.-Mexico-Canada Agreement, itself an update of the North American Free Trade Agreement — was expected to be a technical exercise. Instead, a war of words between U.S. and Canadian officials is pushing the deal to a potential breaking point. State of play: Trade experts and lawyers can't rule out the possibility that the trilateral agreement implodes. That would have far-ranging economic effects: Companies have spent decades investing in the North American supply chains that help produce more affordable cars, supply crude oil to Midwest refineries and equip West Coast homes with natural gas. A major reason the trade war has caused less damage than some economists forecast is that much of the U.S. trade is protected under USMCA. Driving the news: The mandatory joint review of the USMCA — which requires the three countries to decide by July 1 whether to extend the agreement for another 16 years — has taken an adversarial turn, exposing a deepening rift between Washington, D.C., and Ottawa. One core dispute: Washington wants to prevent China from using Mexico or Canada as a back door into the North American market — a particular flashpoint for Canada, which recently struck a limited tariff truce with Beijing. That's on top of other tensions brewing in the background, including how most Canadian provinces have banned U.S. wine and liquor from their shelves in response to President Trump's earlier tariffs. What they're saying: "There are two countries that have retaliated economically against the United States in the past year: the People's Republic of China and Canada," Trump's top trade official, Jamieson Greer, told lawmakers last week . The intrigue: So far, negotiations are happening on a bilateral basis. U.S. officials have met with Mexico's top economic officials, leaving Canada to the side as tensions flare — raising the prospect of separate trade deals with America's neighbors to the north and south. "We have issues with Mexico we're still working through, but Mexico intends on coming to an agreement with us," Deputy U.S. Trade Representative Rick Switzer said last week at an event organized by the Council on Foreign Relations. "The grown-ups are in the room talking because there's a grown-up in leadership there. And I would argue there's not a grown-up in Canada in charge," Switzer said, referring to Mark Carney, a widely respected former central banker who became the nation's prime minister last year. The big picture: USMCA has shielded the U.S. from tariff pain by exempting a bulk of Mexican and Canadian goods from the Trump administration's high levies. NAFTA stitched the three economies into a single production system in the early 1990s. Trump replaced NAFTA with USMCA in 2020, though th