Trump Is Dismantling North America, Not Rebuilding It

A German medical-device maker, Erbe Elektromedizin, announced this month that it will shift future investment to the United States after cutting a 15% tariff deal, and a company official said the quiet part out loud.

Trump’s plan is working. — ERBE Elektromedizin GmbH

He is right — about half of it. The half that is working is the dismantling. Donald Trump has never hidden what he thinks of the North American pact.

I don’t know that I’m going to redo it because, to be honest with you, we don’t need anything Canada has, we don’t need anything that Mexico has, but they need everything that we have, and they have to treat us better. — Donald Trump

The administration has spent the year acting on that view. It declined to extend the USMCA for another 16 years, triggering annual reviews toward a 2036 expiration, and demanded that half of every vehicle be built in the United States specifically — not just in North America ^[1]. It split the trilateral talks into separate bilateral tracks, concluding with Mexico in May while Canada was left out ^[2]. And when the US-Canada talks collapsed on August 30, the sticking point was a demand for veto power over Canada's future trade deals with third countries ^[3]. The US trade representative explained why.

When it comes to things like steel and aluminum, the idea is if we’re going to lower our tariffs and give you the best deal in the world on steel and aluminum, we can’t have Canada be a place where you can get flooded with steel and aluminum from other countries and be used as a backdoor into the U.S. — Jamieson Greer

That is the plan working. The other half — the self-sufficiency that was supposed to replace the dismantled pact — is not arriving. Ask the executives who would have to build it. In a Yale survey, 62% of top executives said they do not plan to increase US manufacturing investment, and 71% said tariffs have hurt their businesses ^[4]. Meanwhile the wall is leaking at the edges: US companies are quietly returning to Chinese suppliers as tariff differentials narrow, with China and Vietnam now both facing 12.5% under Section 301, and one consumer-goods firm moved its manufacturing back to China after a failed relocation to Thailand ^[5]. And the wall is not holding out the world — it is not even holding out Mexico. Mexico's non-oil exports to the US rose 36% in June despite the tariff regime ^[6]. The neighbor the wall is actually hurting is Canada, whose exports to the US fell 12.5% over the past year ^[7]. Canada, facing the loss of its largest market, has spent the year responding. It is building the internal market it never needed before — Bill C-5, in force since January, strips away interprovincial trade barriers, and the government estimates a unified market could add $210 billion to GDP ^[8]. And it has turned outward, toward the rival the wall was meant to keep out. In January, Prime Minister Carney signed a strategic partnership with China, cutting Canadian tariffs on Chinese electric vehicles from 100% to 6.1% for 49,000 vehicles a year ^[9][10]. No Canadian official has said the tariffs drove the turn to Beijing, but the sequence is hard to miss. Carney's framing was blunt.

The world has changed much since that last visit, I believe the progress that we have made in the partnership sets us up well for the new world order. — Mark Carney

The irony is not subtle. The US trade representative warned in August that Canada could not be allowed to become a backdoor for Chinese steel and aluminum into the US market — that was the demand for veto power ^[3]. But the backdoor he feared is now opening through official policy, not smuggling: a strategic partnership that routes Chinese vehicles, and eventually Chinese steel, through a Canada that has been told it cannot rely on its largest market. The wall built to keep China out is what pushed the closest trading partner toward China.