Canada Talks Up Pension Funds' Financial Muscle as Lever in US Trade Talks
Dominic LeBlanc, the minister responsible for US trade, is in Washington for talks with US lawmakers. He brought up Canada's pension funds when asked if President Donald Trump will seek a specific pledge for more investment into the US.
'If they're looking for countries that invest massively in the United States, that's great news for Canada,' LeBlanc said in Washington after the meetings. 'Our pension funds alone have over $1 trillion of investment in the United States. That can potentially grow by $100 billion or more a year, and that's just the big nine Canadian pension funds.'
The US has offered the idea of increased foreign investments as one option for some partners in exchange for more favorable trade treatment. Trump said this week that the US has reached a trade deal with Japan that includes a promise of a $550 billion Japanese-backed fund for investing in the US, though terms remain unclear. The US and South Korea have also discussed creating an investment vehicle for US projects, people familiar with the matter told Bloomberg News.
LeBlanc stopped short of saying the government would force pension funds to increase their US assets or invest in specific American projects as a quid pro quo for lower tariffs from Trump.
Canada's public pension managers are significant investors in US infrastructure and other assets. The largest, the Canada Pension Plan Investment Board, had 47% of its capital allocated to the US as of the end of March. Its recent US deals included a joint venture with Equinix Inc. to raise $15 billion to build new data centers, including in the US.
But traditionally those pension funds are shielded from political interference in their investment decisions. CPPIB had C$714 billion under management as of March 31.
Michel Leduc, a spokesperson for CPPIB, said in an interview that the fund is 'not part of any negotiations' and 'not being asked to invest more in the US,' though 'there's been some outreach from the Canadian government to understand the facts.'
CPPIB is expected to grow to C$1 trillion by the early 2030s and 'obviously you will see the dollars being more significant in the US' with that growth, Leduc said.
LeBlanc said he met with Commerce Secretary Howard Lutnick on Wednesday night and they had a 'productive, cordial discussion.' On Thursday he met with Republican senators including Tim Scott of South Carolina, Shelley Moore Capito of West Virginia and Roger Marshall of Kansas.
But the minister was vague on the question of whether Canada can reach a trade deal with the US by Aug 1.
Trump has threatened to hike US tariffs on Canadian imports to 35% on that day, up from 25% — though White House officials have suggested they'll continue exempting goods covered by the North American free trade pact known as USMCA.
'Canadians expect us to take the time necessary to get the best deal we can in the interest of Canadian workers,' LeBlanc said. He said Canada will only sign an agreement once Prime Minister Mark Carney 'decides that it's the best deal we can get.'
Earlier this week, Carney himself lowered expectations for an agreement in the short term. He told reporters that Canada's aim 'is not to reach a deal whatever it costs,' but would instead use all the time it needs to reach the best outcome.
Carney described the negotiations as complex, in part because the Trump administration has a number of objectives 'that change from time to time.'
For now, the Canadian economy has some breathing room because many products, including Canada's vast exports of crude oil, fuel and fertilizer, are exempt from tariffs when they're shipped under the rules of the US-Mexico-Canada Agreement.
Yet Canada still faces US tariffs and duties on a few key sectors: autos, steel, aluminum and lumber. Carney's team has been looking for a path forward on eliminating or at least reducing those tariffs.
Kirsten Hillman, Canada's ambassador to the US, told reporters that American officials have taken note of Canada's recent actions to limit foreign steel imports — particularly from China.
'There is a time when the deal is the right deal, and it's important for us to be in a position to continue negotiating til we get to that point,' she said. 'Some of the measures that we're taking, including in steel last week, are designed to help us have the route that we need to get where we need to go.'
This article was generated from an automated news agency feed without modifications to text.
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The Hindu
18 minutes ago
- The Hindu
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Mint
18 minutes ago
- Mint
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Business Standard
18 minutes ago
- Business Standard
US-EU trade deal wards off escalation, to raise costs for firms, consumers
President Donald Trump and European Commission President Ursula von der Leyen have announced a sweeping trade deal that imposes 15 per cent tariffs on most European goods, warding off Trump's threat of a 30 per cent rate if no deal had been reached by August 1. The tariffs, or import taxes, paid when Americans buy European products could raise prices for US consumers and dent profits for European companies and their partners who bring goods into the country. Here are some things to know about the trade deal between the United States and the European Union: What's in the agreement? Trump and von der Leyen's announcement, made during Trump's visit to one of his golf courses in Scotland, leaves many details to be filled in. The headline figure is a 15 per cent tariff rate on the vast majority of European goods brought into the US, including cars, computer chips and pharmaceuticals. It's lower than the 20 per cent Trump initially proposed, and lower than his threats of 50 per cent and then 30 per cent. Von der Leyen said the two sides agreed on zero tariffs on both sides for a range of strategic goods: Aircraft and aircraft parts, certain chemicals, semiconductor equipment, certain agricultural products, and some natural resources and critical raw materials. Specifics were lacking. She said the two sides would keep working to add more products to the list. Additionally, the EU side would purchase what Trump said was USD 750 billion worth of natural gas, oil and nuclear fuel to replace Russian energy supplies, and Europeans would invest an additional USD 600 billion in the US. What's not in the deal? Trump said the 50 per cent US tariff on imported steel would remain; von der Leyen said the two sides agreed to further negotiations to fight a global steel glut, reduce tariffs and establish import quotas that is, set amounts that can be imported, often at a lower rate. Trump said pharmaceuticals were not included in the deal. Von der Leyen said the pharmaceuticals issue was on a separate sheet of paper from Sunday's deal. Where the $600 billion for additional investment would come from was not specified. And von der Leyen said that when it came to farm products, the EU side made clear that there were tariffs that could not be lowered, without specifying which products. What's the impact? The 15 per cent rate removes Trump's threat of a 30 per cent tariff. It's still much higher than the average tariff before Trump came into office of around 1 per cent, and higher than Trump's minimum 10 per cent baseline tariff. Higher tariffs, or import taxes, on European goods mean sellers in the US would have to either increase prices for consumers risking loss of market share or swallow the added cost in terms of lower profits. The higher tariffs are expected to hurt export earnings for European firms and slow the economy. The 10 per cent baseline applied while the deal was negotiated was already sufficiently high to make the European Union's executive commission cut its growth forecast for this year from 1.3 per cent to 0.9 per cent. Von der Leyen said the 15 per cent rate was the best we could do and credited the deal with maintaining access to the US market and providing stability and predictability for companies on both sides. What is some of the reaction to the deal? German Chancellor Friedrich Merz welcomed the deal which avoided an unnecessary escalation in transatlantic trade relations" and said that we were able to preserve our core interests, while adding that I would have very much wished for further relief in transatlantic trade. The Federation of German Industries was blunter. "Even a 15 per cent tariff rate will have immense negative effects on export-oriented German industry," said Wolfgang Niedermark, a member of the federation's leadership. While the rate is lower than threatened, "the big caveat to today's deal is that there is nothing on paper, yet," said Carsten Brzeski, global chief of macro at ING bank. With this disclaimer in mind and at face value, today's agreement would clearly bring an end to the uncertainty of recent months. An escalation of the US-EU trade tensions would have been a severe risk for the global economy," Brzeski said. This risk seems to have been avoided. What about car companies? Asked if European carmakers could still sell cars at 15 per cent, von der Leyen said the rate was much lower than the current 27.5 per cent. That has been the rate under Trump's 25 per cent tariff on cars from all countries, plus the preexisting US car tariff of 2.5 per cent. The impact is likely to be substantial on some companies, given that automaker Volkswagen said it suffered a $1.5 billion hit to profit in the first half of the year from the higher tariffs. Mercedes-Benz dealers in the US have said they are holding the line on 2025 model year prices until further notice. The German automaker has a partial tariff shield because it makes 35 per cent of the Mercedes-Benz vehicles sold in the US in Tuscaloosa, Alabama, but the company said it expects prices to undergo significant increases in coming years. What were the issues dividing the two sides? Before Trump returned to office, the US and the EU maintained generally low tariff levels in what is the largest bilateral trading relationship in the world, with some USD 2 trillion in annual trade. Together the US and the EU have 44 per cent of the global economy. The US rate averaged 1.47 per cent for European goods, while the EU's averaged 1.35 per cent for American products, according to the Bruegel think tank in Brussels. Trump has complained about the EU's 198 billion-euro trade surplus in goods, which shows Americans buy more from European businesses than the other way around, and has said the European market is not open enough for US-made cars. However, American companies fill some of the trade gap by outselling the EU when it comes to services such as cloud computing, travel bookings, and legal and financial services. And some 30 per cent of European imports are from American-owned companies, according to the European Central Bank. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
