Canada Talks Up Pension Funds' Financial Muscle as Lever in US Trade Talks

Mint

3 days ago

Canada's major pension funds could boost their investments in the US, a top Canadian cabinet minister said, as the country looks to negotiate a trade agreement with the Trump administration.
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.'
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