USA & Canada Intelligence Brief — March 16, 2026

1 Trump demands ~7 countries join Hormuz naval coalition — no public commitments from any ally; Japan, Australia, UK refuse; South Korea deliberating; IRGC says strait “merely under control”; Brent above $104 — President Trump told reporters aboard Air Force One on Sunday that he had demanded “about seven countries” send warships to keep the Strait of Hormuz “open and safe” but declined to name them; he wrote on Truth Social that “hopefully China, France, Japan, South Korea, the UK, and others” would send ships so “the Hormuz Strait will no longer be a threat by a nation that has been totally decapitated”; Japan’s PM Takaichi said Monday “we have not made any decisions whatsoever about dispatching escort ships”; Australia said it would not send ships; UK PM Starmer declared “we will not be drawn into the wider war”; Germany’s FM Wadephul called the plan “very sceptical”; South Korea confirmed it received a request and was “carefully deliberating”; China’s MFA called for all parties to “immediately stop military operations”; the IRGC’s naval commander Tangsiri said the strait “has not been militarily blocked and is merely under control”; Iran’s FM Araghchi told CBS Tehran was “open” to discussing safe passage; the Wall Street Journal reported the administration plans to announce the coalition this week; Trump threatened NATO with a “very bad future” for not helping; US Energy Secretary Chris Wright said he expected China to be “a constructive partner”; Brent crude opened above $104.50 on Monday, up more than 40% since February 28; at least 10 tankers have been hit or attacked since the war started; IEA updated the emergency release to nearly 412 million barrels

2 Bessent-He Paris talks produce “remarkably stable” framework for Trump-Xi summit — six hours at OECD HQ; China open to US agriculture, Boeing, coal, oil and gas purchases; proposed “Board of Trade” and “Board of Investment” mechanisms; Trump visit March 31–April 2 — US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng held “remarkably stable” talks at OECD headquarters in Paris on Sunday that ran over six hours; sources told Reuters and CNBC the Chinese side showed openness to purchasing US poultry, beef and non-soybean row crops; Bessent also pushed for Chinese purchases of Boeing jetliners and US coal, oil and natural gas; the two sides discussed new formal mechanisms — a proposed “Board of Trade” and “Board of Investment” — to manage bilateral commerce; technical talks continued Monday; the meetings set in motion possible “deliverables” for Trump’s expected state visit to Beijing from March 31 to April 2, though Trump told the Financial Times he could delay if China does not help unblock Hormuz; Xinhua called for “meaningful progress” to restore confidence; trade analysts cautioned that with Washington focused on the Iran war, expectations should be modest; Wendy Cutler of the Asia Society noted deliverables could be “spread out” across up to four leaders’ meetings this year including APEC in November and G20 in December

3 FOMC March 17–18 looms as most consequential meeting of year — first dot plot incorporating oil shock; 99%+ probability of hold at 3.50–3.75%; core PCE at 3.1%; Goldman pushes first cut to September; Q4 GDP revised down to 0.7% — the Federal Reserve convenes Tuesday-Wednesday for a meeting the market has priced as a certainty to hold rates unchanged, with CME FedWatch showing 99.2% probability of no change; the far more significant development is the updated Summary of Economic Projections and dot plot — the first to incorporate the Iran war’s oil shock; core PCE accelerated to 3.1% year-on-year in January with a month-on-month increase of 0.4%; Q4 2025 GDP was revised sharply lower to 0.7% annualised from 4.4% in Q3; Goldman Sachs pushed its first-cut forecast from June to September; Barclays expects a single quarter-point reduction for the entire year; High Frequency Economics’ Carl Weinberg suggested the Fed should consider a rate hike to push back oil-shock inflation; Morgan Stanley’s Michael Gapen said risks are skewed toward cuts arriving “later and larger” if activity weakens; the February jobs report showed a surprise loss of 92,000 jobs; unemployment rose to 4.4%; the Employ America FOMC preview anticipated the median dot may sit on a “knife-edge” with half the Committee projecting no cuts for 2026; Powell’s term expires May 15 and the transition to Kevin Warsh (pending confirmation) adds leadership uncertainty

4 US fiscal position strains as war costs mount — deficit hit $1.004T through February; Bessent authorises 30-day waiver to purchase sanctioned Russian crude at sea; gas pump at $3.58/gal; IEA updates release to 412M barrels — the US budget deficit reached $1.004 trillion through the first five months of FY2026, though down 12% year-on-year; CBO projects the full-year deficit at $1.9 trillion (5.8% of GDP); the 30-year Treasury auction tailed at 4.871% versus 4.750% expected; debt is on track for 118% of GDP by 2035; Bessent authorised a 30-day waiver of sanctions to allow purchase of Russian oil stranded at sea in tankers — a pragmatic move to raise global supply; US gasoline pump prices rose to $3.58/gallon, up 21% in one month, with some analysts warning of $5/gallon by summer if the conflict persists; the IEA updated its emergency reserve release to nearly 412 million barrels — “by far the largest ever” — with Asian members releasing immediately and American reserves flowing from end of March; the SPR drawdown combined with war-related spending may reverse the modest fiscal improvement seen in early FY2026; the 30-year yield at 4.91% reached its 95th percentile over five years; credit spreads widened moderately with high yield OAS at 298bp (+17bp)

5 Carney’s Canada navigates dual crisis — C$35bn Arctic defence plan meets CUSMA zombie review beginning March 16; only 9% of Canadians trust US as ally — Canadian PM Mark Carney spoke with UK PM Starmer on Saturday about the Hormuz situation separately from the Trump call; Canada’s C$35 billion (~$25 billion) Arctic defence and infrastructure plan includes northern base upgrades, the Mackenzie Highway extension and Grays Bay deepwater port — Canada’s first overland Arctic connection; C$32 billion comes from existing commitments with C$3 billion in new spending; the CUSMA zombie review formally begins Monday March 16, adding trade uncertainty to the energy crisis; Stellantis is shifting $13 billion in production to the US in response to trade pressures; only 9% of Canadians trust the US as an ally according to recent polling; BoC rate stands at 2.25%; as covered in last week’s US & Canada Intelligence Brief, Carney departed for Norway after unveiling the Arctic plan, positioning Canada’s northern sovereignty as a strategic priority amid the broader geopolitical realignment

GEOPOLITICS Trump’s Hormuz coalition demand produced the most consequential 48 hours of alliance politics since the Iraq War. Every major ally said no — Japan, Australia, the UK, Germany, France. The only country that actually moved oil through the strait is India, which did it through bilateral diplomacy with Tehran, not warships. The coalition WSJ says is coming this week faces a fundamental problem: the countries that need Hormuz most are the ones least willing to force it open militarily, because they know Iran can retaliate against their ships, bases and territory. Trump’s threat of a “very bad future” for NATO echoes his first-term alliance management style, but this time the stakes are measured in $104 oil and rising pump prices at home.

TRADE The Bessent-He Paris talks are the most significant bilateral economic encounter in months, and they arrived at the exact right moment. Both sides need stability: China’s 45% Hormuz oil exposure creates urgency, and Washington’s inflation problem creates incentive. The proposed Board of Trade mechanism — designed to find products where US-China trade can grow without compromising national security — is the most ambitious bilateral trade architecture since the Phase One deal. If it survives the Trump-Xi summit, it institutionalises managed commerce. If it doesn’t, it was a Paris afternoon. Trump’s threat to delay the Beijing visit over Hormuz is the wild card.

MONETARY The FOMC meeting is less about the rate decision — 99.2% hold — and more about the narrative the dot plot tells. Core PCE at 3.1%, Q4 GDP at 0.7%, and oil above $100 create a stagflationary cocktail that the Fed’s models were not built to handle. Goldman pushing the first cut to September and Barclays projecting a single cut for the year tell you the market has abandoned the pivot trade. The median dot may show half the Committee projecting no cuts at all. Powell’s final months as Chair will be defined by whether he can thread the needle between an energy-driven inflation surge and a cooling labour market that lost 92,000 jobs in February.

FISCAL The fiscal picture is deteriorating on every metric that matters. Deficit at $1 trillion through February. CBO projecting $1.9 trillion for the full year. The 30-year auction tailing by 12 basis points. Debt on track for 118% of GDP by 2035. And now Bessent is authorising Russian crude purchases through sanctions waivers because the war his administration started is creating a supply crisis his Treasury must help solve. Gas at $3.58/gallon and rising is the number that connects fiscal policy to kitchen tables — and to midterm elections.

CANADA Canada is simultaneously building Arctic infrastructure, beginning a CUSMA review it didn’t want, and watching its largest trading partner conduct a war that is reshaping energy markets. Carney’s C$35 billion (~$25 billion) Arctic plan is the most significant Canadian defence initiative in a generation — but the CUSMA review that begins today is the more immediate threat to the economy. Stellantis shifting $13 billion to US production shows the trade pressure is already producing industrial reallocation. The 9% ally trust figure is the lowest in modern Canadian polling and tells you everything about where the relationship stands.

1 FOMC Summary of Economic Projections — Wednesday March 18 — the SEP will show revised GDP growth (down from December’s ~2.3%), higher PCE inflation and core PCE projections, and a dot plot that may eliminate the rate cuts assumed in the December median; the gap between the dot plot and market pricing will define the next phase of the rates trade; Powell’s press conference will be scrutinised for how he characterises oil-shock inflation — “transitory” language would tank markets, while “looking through” it would signal patience.

2 Bessent’s 30-day Russian crude waiver tests sanctions architecture — the waiver allows purchase of Russian oil stranded at sea, a pragmatic supply measure that puts the Treasury secretary in the position of unwinding his own administration’s sanctions to manage the fallout from its own war; as covered in last week’s US & Canada Intelligence Brief, the waiver follows the logic that global supply matters more than sanctions enforcement during a crisis.

3 CUSMA zombie review formally begins March 16 — the trilateral agreement enters its scheduled review period at the worst possible time: Canada’s relationship with the US is at its lowest ebb in modern polling; Stellantis is relocating $13 billion in production to the US; Section 301 probes are targeting 16 economies; and the energy crisis is reshaping North American supply chains in real time.

4 US-China Board of Trade / Board of Investment in technical talks — Monday discussions at OECD headquarters in Paris; the Board of Trade would identify products and sectors where bilateral commerce can grow without compromising national security; the Board of Investment would address “discrete investment issues”; if adopted at the Trump-Xi summit, they represent the first formal bilateral trade management architecture since the Phase One deal.

5 February PCE data due Friday March 21 — consensus 2.9% y/y headline, core 3.1%; January core came in at 3.1% with 0.4% m/m; the report will be the first hard inflation data the market receives after the FOMC; if core PCE reaccelerates, the single-cut-for-2026 narrative hardens; if it eases, the September cut timeline survives; Inflation Insights’ Sharif: “All the key measures are moving in the wrong direction.”

6 Hormuz coalition announcement expected this week — WSJ reports the administration plans to name countries that have agreed to escort ships; no nation has publicly committed; the gap between the announcement and actual commitments will determine whether this is a functional military operation or a diplomatic press release; the European refusal and Asian non-participation leave the coalition’s composition an open question.

Donald Trump — the president’s Hormuz coalition demand produced the most significant allied refusal since Iraq; every major partner said no or stalled; the threat of a “very bad future” for NATO, the conditional linkage of the Beijing summit to Hormuz, and the ongoing war he authorised on February 28 have converged into a foreign policy moment where American unilateralism faces the limits of alliance coercion; domestically, $3.58 gasoline and rising connects the war directly to midterm vulnerability.

Scott Bessent — the Treasury Secretary ran two diplomatic tracks simultaneously: six hours of “remarkably stable” trade talks with He Lifeng in Paris while authorising a 30-day sanctions waiver for Russian crude at sea; the combination captures the administration’s policy tension — building a coalition to pressure Iran while unwinding sanctions to manage the supply crisis the war created; his push for Chinese Boeing and energy purchases positions the Beijing summit for deliverables.

Jerome Powell — the Fed Chair enters his final consequential meeting with a stagflationary bind: core PCE at 3.1%, GDP at 0.7%, oil above $100 and a February jobs report that lost 92,000 positions; the dot plot he presides over will define the rate outlook for the remainder of his tenure; the transition to Warsh adds uncertainty about whether his successor will continue the data-dependent approach or pivot to a more politically responsive posture.

Mark Carney — Canada’s PM spoke with both Starmer and Trump separately about Hormuz while managing the C$35 billion (~$25 billion) Arctic plan and the CUSMA review beginning today; the Arctic initiative positions Canada’s northern sovereignty as a strategic asset at a moment when the US relationship is at its weakest point in modern polling; the 9% ally trust figure gives Carney domestic cover for a more independent posture.

Chris Wright — the US Energy Secretary told NBC he has been “in dialogue” with countries Trump mentioned and expects China to be “a constructive partner” in reopening Hormuz; his role bridges the gap between Trump’s confrontational public demands and the quieter diplomatic engagement necessary to actually assemble a coalition; the IEA’s updated 412 million barrel release is the largest supply intervention in history and falls within his portfolio.

1 FOMC rate decision and SEP — March 18 at 2:00pm ET — the hold is certain but the dot plot is not; the median may show zero or one cut for 2026 versus the two cuts projected in December; GDP forecasts will be revised lower; inflation forecasts higher; Powell’s press conference at 2:30pm will set the narrative for the next quarter of markets.

2 Section 301 trade probes — public comments April 15; remedies by July — USTR targeting the EU and 15 other economies; the Supreme Court’s IEEPA ruling forced a legal pivot from emergency powers to statutory trade authority; Bessent said tariffs would return to “pre-ruling levels by August”; the probes add a second front of economic pressure alongside the energy crisis.

3 CUSMA review begins March 16 — the trilateral agreement enters its scheduled review with Canada-US relations at their lowest point in modern history; Mexico’s position is complicated by energy sector reforms; the review could produce modest adjustments or become a vehicle for broader trade confrontation depending on whether the administration treats it as routine or strategic.

4 Powell term expiration May 15 — Warsh transition looming — Kevin Warsh’s pending confirmation as the next Fed Chair creates a two-month window of leadership uncertainty at the most consequential monetary policy moment since the pandemic; the March SEP will be Powell’s final major economic forecast; market participants are watching whether Warsh will inherit a data-dependent framework or impose a more hawkish or politically responsive approach.

Trump’s Hormuz coalition demand exposed the widest gap between American expectations and allied willingness since the 2003 Iraq War. Every major partner refused: Japan, Australia, the UK, Germany, France. South Korea is deliberating, which in diplomatic terms means searching for a polite no. The only country that actually moved oil through the strait is India, through bilateral talks with Tehran. The coalition announcement WSJ reports is coming this week may name countries, but unless it produces warships in the water, it is a press release dressed as strategy.

The FOMC meeting is the most consequential monetary policy event of the year because the dot plot will tell the market what the Fed thinks the oil shock means for rates. Core PCE at 3.1%, Q4 GDP at 0.7%, February jobs down 92,000 — these numbers describe a stagflationary environment that the Fed’s dual mandate was not designed to navigate simultaneously. Goldman pushing the first cut to September and half the Committee potentially projecting zero cuts for 2026 would formally end the pivot trade that defined market positioning for 18 months.

Bessent is running the most complex economic diplomacy in a generation. Six hours of “remarkably stable” talks with He Lifeng in Paris while simultaneously authorising a 30-day sanctions waiver for Russian crude at sea captures the contradiction: building trade architecture with China while unwinding sanctions on Russia to manage the supply crisis from a war the administration launched 16 days ago. The proposed Board of Trade mechanism is ambitious. Whether it survives the Trump-Xi summit depends on whether both sides view stability as more valuable than leverage.

The fiscal numbers are stark. A trillion-dollar deficit through February. CBO projecting $1.9 trillion for the year. The 30-year yield at its 95th percentile. Gas at $3.58 and rising. The SPR drawdown that once looked like a strategic reserve is now an emergency supply measure, and the war spending that hasn’t yet been scored will worsen an already deteriorating trajectory. The market is telling you this through the 30-year auction tail: demand for long-duration US debt is weakening precisely when supply is about to increase.

Canada’s CUSMA review begins today against a backdrop that makes every line item politically charged. Carney’s C$35 billion (~$25 billion) Arctic plan and the 9% ally trust figure frame Canada’s strategic posture: building sovereignty infrastructure while preparing for a trading relationship that may not survive the review in its current form. This is part of The Rio Times’ daily intelligence coverage of the USA and Canada for the Latin American financial community. Stellantis shifting $13 billion to US production is the kind of industrial reallocation that CUSMA was designed to prevent — and its failure to do so is the argument Canada’s critics of the agreement have been making for years.