Good day,

This edition is coming a little later than usual.

I held off because it looked like Canada and the U.S. might be getting close to a trade agreement and I wanted to see if something concrete came out before sending this.

That hasn’t happened yet.

The August 19 deadline is tomorrow, so barring another delay, we should have a much clearer idea of where Canada-U.S. trade stands by then.

For now, here’s where negotiations stand, plus a major new Churchill Falls agreement, Ontario’s cash-bail fight, Ottawa walking back its EV mandate and an interesting shift in Quebec’s sovereignty debate.

Canada and the U.S. are still negotiating ahead of August 19, when new 50 per cent tariffs are scheduled to hit roughly US$20 billion worth of Canadian goods.

One of the biggest remaining issues appears to be autos.

Negotiators are discussing reducing the current U.S. tariff on Canadian vehicles from 25 to 15 per cent.

But Canada and the U.S. disagree on what that tariff should actually apply to.

Washington reportedly wants to deduct only the American content inside a Canadian-built vehicle. Canada wants qualifying Canadian, American and Mexican parts treated as North American content.

That sounds technical, but it could dramatically change the final tariff. Industry officials say Canada’s approach could push the effective rate on some vehicles into the single digits.

The broader problem is that these new tariffs do not receive the usual CUSMA protection that shielded many Canadian exports during earlier rounds.

And even if there is a deal tomorrow, the broader CUSMA review is still a separate process.

Newfoundland and Labrador, Quebec and Ottawa have announced a new agreement aimed at replacing the infamous 1969 Churchill Falls arrangement.

For decades, Hydro-Québec was able to buy Labrador electricity at extremely low prices while Newfoundland watched much of the value leave the province.

The new agreement gives Newfoundland more electricity for itself, better access to outside markets and a much larger expected financial return.

The province estimates the deal is worth about $49 billion in 2026 net-present-value terms.

Newfoundland will be able to retain up to 2,350 MW from Churchill Falls and Gull Island and receive 985 MW of guaranteed transmission access through Quebec toward markets including New York and New England.

Ottawa is also providing support valued at roughly $3.5 billion, while Newfoundland plans a 15 per cent residential electricity rebate once the final agreements are completed.

That last part matters because the political agreement has been announced, but the final binding commercial documents still need to be finished.

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The federal government received 10,006 applications for its early-retirement program before last week’s deadline.

The program allows approved employees to receive an immediate pension based on their years of service without the usual early-retirement penalty.

Ottawa sent information to roughly 68,000 potentially eligible workers as it tries to reduce the size and cost of the federal public service.

But 10,000 applications do not automatically mean 10,000 government positions will disappear.

Some applications may be rejected. Departments may also replace workers whose jobs are still considered necessary.

The government could save money by eliminating positions after people retire, but it also risks losing experienced employees and slowing services.

There is also a familiar government problem to watch: retired workers leaving payroll and later returning as higher-priced consultants.

I posted a video breaking down Canada’s latest inflation numbers and why the headline goes beyond simply saying prices increased.

July inflation reached 3.0 per cent year over year.

One thing I noticed in the comments is that a lot of people understandably misunderstand what that means.

It does not mean prices rose 3 per cent every month, and it does not mean prices are only 3 per cent higher than five years ago.

It means the overall CPI was about 3 per cent higher than it was 12 months earlier.

In the video, I also explain the bigger chain:

energy prices → inflation → Bank of Canada expectations → bond yields and borrowing costs → mortgages, businesses and the wider economy.

I’m going to start including more of my videos inside the newsletter when they help explain one of the bigger economic or political stories.

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The federal government has formally proposed repealing Canada’s Electric Vehicle Availability Standard.

The old rules were designed to gradually increase zero-emission vehicle sales until reaching 100 per cent of new light-duty vehicle sales by 2035.

Ottawa is no longer pursuing that mandatory sales quota.

Instead, the government says it will use vehicle emissions standards and aim for 75 per cent EV sales by 2035 and 90 per cent by 2040.

Those are targets, not the same type of legal sales requirement.

The government’s own regulatory analysis acknowledges that repealing the mandate is expected to result in fewer EVs being sold.

Automakers had argued the original rules were moving faster than consumer demand, charging infrastructure and affordable vehicle availability.