{"id":20986,"date":"2025-10-10T19:22:07","date_gmt":"2025-10-10T19:22:07","guid":{"rendered":"https:\/\/www.rbc.com\/en\/?post_type=rbc_tl&p=20986\/what-if-we-dont-get-the-deal-we-want"},"modified":"2025-11-06T15:38:32","modified_gmt":"2025-11-06T15:38:32","slug":"the-era-of-messy-managed-trade-is-here","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/the-trade-zone\/the-era-of-messy-managed-trade-is-here\/","title":{"rendered":"Trade Zone: The era of messy \u201cmanaged trade\u201d is here"},"content":{"rendered":"\n
\n
\n

By Jordan Brennan<\/strong>, Head of RBC Thought Leadership<\/em><\/p>\n\n\n\n

There was a volley of compliments, smiles and backslaps between Donald Trump and Mark Carney during their meeting earlier this week, with the U.S. President telling reporters that Canada was going to walk away \u201cvery happy.\u201d But optimism had come crashing down by the next day, with the U.S. Commerce Secretary Howard Lutnick telling a Toronto audience that \u201ccar assembly is going to be in America and there is nothing Canada can do about it.\u201d

The view from the White House is that Americans don\u2019t need Canada to assemble their cars. It\u2019s difficult to know what to make of Secretary Lutnick\u2019s remarks. Is it a genuine threat or \u201cart of the deal\u201d bravado in which Trump asks for the sun, the moon and the stars and ends up settling for the moon? Word on the street is that President Trump doesn\u2019t like being told \u201cAmerica needs Canadian oil, steel, lumber\u201d and so on.

A Canadian trade team remains in Washington to chase sectoral deals on steel, aluminum, energy and autos\u2014a hallmark of what Washington now calls \u201cmanaged trade.\u201d With little material progress to date, and an American negotiating team that\u2019s bogged down in bilateral deals with many other countries, it\u2019s an open question if Canada will be able to secure meaningful sectoral agreements prior to the formal review of CUSMA next July.

It looks like \u201cmanaged trade\u201d is here to stay for now. But what does that mean?

In June, Trump doubled tariffs on Canadian steel and aluminum to 50%, up from the 25% rate announced in February. The impact was immediate. Canada produces roughly 13 million tonnes of primary steel annually, exporting<\/a> half\u2014and nine out of every ten tonnes goes to the U.S. Those flows are now drying up.

Steel prices tell the story.<\/strong> The chart below shows the value of Canadian steel exports to the U.S. and U.S. steel prices, both indexed to 100 in January 2025 to simplify the comparison. In the 12 months leading up to Trump\u2019s tariffs, Canada\u2019s steel exports to the U.S. and American steel prices both trended downward. Then came the trade war and the two series diverged\u2014Canadian steel exports fell off a cliff while American steel prices marched north.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

The new tariffs have reignited steel price inflation.<\/strong> With Canadian imports throttled, American producers are facing less competition and are quietly raising prices. U.S. steel imports from Canada are down 49% while steel prices are up 17% since January.

This is the face of managed trade.<\/strong> It isn\u2019t about opening markets; it\u2019s about organizing them. Under the free-trade order of the past four decades, governments agreed to minimal barriers and let consumer preferences, technology, and competition sort out winners and losers. Managed trade flips that logic. Governments pick strategic sectors, shield them from global competition, and steer investment through tariffs, quotas, and subsidies.

For Canada, the question isn\u2019t whether we like it\u2014it\u2019s how we adapt to it. Ottawa looks ready to pivot, having announced<\/a> a suite of sector supports in September. We need to learn to play by the new set of rules: identify national priorities, deploy capital strategically, and make reciprocity work in our favour.<\/p>\n\n\n\n

Managed trade may be messy. But in this new era, it\u2019s the only game on the field.<\/p>\n<\/div>\n<\/section>\n\n\n\n

\n
\n

The week that was<\/h2>\n\n\n\n