It’s no secret that the U.S. and China are not settled in their business dealings currently and the latest round of tweets from the White House in the last week of May, unfortunately, indicates that the heated trade war is ramping up, not slowing down.
So what is Canada’s role in supporting the U.S. while trying to position their economy to gain from the conflict?
USMCA Agreement and Metal Trade
The USMCA (US-Mexico-Canada) Agreement was created to replace the NAFTA. Until recently the USMCA was at a standstill due to tariffs placed on Canada and Mexico by Trump. Now fast forward less than a year later, the same countries involved in the USMCA have reached an agreement that allows the sale of both steel and aluminum between the countries and everyone in the agreement mutually agrees to prevent Chinese steel from being sold directly to the U.S.
The move to lift the tariff is seen as an unprecedented move made by the U.S administration. The new USMCA agreement calls for both Mexico and Canada to place tougher monitoring and enforcement measures to prevent subsidized Chinese steel from being imported to U.S. via their territory. In return, both Canada and Mexico can sell aluminum and steel directly to the U.S.
More Tariffs on Mexico
Just days after the U.S., Canada and Mexico negotiate the steel and aluminum trade details Trump threatens Mexico with a new tariff on auto imports. The tariff is set to start on June 10th if they do not help resolve the illegal immigration issue.
The proposed tariff infuriated Mexico and it could possibly send them into a recession. As this issue plays out, Canada is in the midst of seeking Congressional approval for USMCA, which many analyst now warn the USMCA could be in jeopardy now due to these new tariffs and confidence levels involving the U.S. trade deal talks.
The Huawei Ban – What does it mean for tech retailers
Next hot topic is Huawei. Huawei is the No. 1 telecom supplier and No. 2 smartphone maker in the world, despite their nonexistence in the U.S. market after their networking equipment was banned in 2012, they are still in the lead. The news around them continues to dominate the media circuit due to Trump tariffs placed on their products and due to Huawei Technologies’ CFO Meng Wanzhou house arrest in Canada pending her extradition hearing.
What does this mean for Canadian tech retailers? This could be good news if position correctly as there is a shake up between trading partners and their goods. Huawei either will deflect the attacks successfully or they will suffer some business difficulties.
Retailers and manufacturers in the metal industry, the mobile tech industry and even the car industry should pay close attention to how Canada and Mexico are trying to take advantage of the opportunity in their recent metal trade deal discussions, and set up their operations to win over some of the demand that may result from these negotiations.
Summary
Canada, the U.S. and Mexico signed what is considered a very good metals deal. If Mexico can deflect the newly proposed auto tariff from becoming effective, both Canada and Mexico will immediately begin to benefit from the U.S. trade conflicts with China. The ratification of the USMCA Agreement also could positively impact retail and mixed-use real estate opportunities in Canada as many sectors including steel, aluminum, auto and mobile tech could find themselves with more demand from their American neighbors.
Contact ReDev to discuss the commercial real estate opportunities that are available.