Experts believe Trump won’t wait for the 2026 review of the CUSMA trade pact, raising concerns for Canada and Mexico
WASHINGTON: So, Trump is at it again, huh? His promise to slap 25% tariffs on Canada and Mexico has really shaken things up. It seems like he’s not just making noise; he’s gearing up to shake the foundations of a major trade deal.
The Canada-U.S.-Mexico Agreement, or CUSMA, is supposed to be reviewed in 2026. But experts like Greta Peisch think Trump won’t sit around waiting. She believes he’ll dive into this sooner rather than later.
Peisch mentioned that with all the attention Trump has given to trade in North America, it’s likely he’ll want to get the ball rolling quickly. Remember how he pulled the plug on NAFTA? That showed just how much power he has over Canada.
Canada relies heavily on the U.S. for trade, with over 77% of its exports heading south. The negotiations for CUSMA were a big deal for Canada, especially after Trump’s first win.
Back in 2018, he even hinted at a 25% tariff on Canadian cars, but that never happened. Still, he did impose hefty tariffs on steel and aluminum, which sent a clear message that things were changing.
Robert Lighthizer, a former U.S. trade rep, noted that those tariffs were a sign that the old ways were gone. Trump wasn’t afraid to stir the pot to push his trade agenda.
Canada and Mexico managed to negotiate some exemptions after facing their own tariffs, and they eventually signed the new deal. But not everyone is optimistic about what’s next.
Meredith Lilly from Carleton University thinks the deal was a win for Trump, and she hopes he won’t want to mess with it too much. But Carlo Dade from the Canada West Foundation isn’t so sure. He recalls Trump saying he’d notify Canada and Mexico about renegotiating CUSMA right after taking office.
Dade warns that Trump’s “Make America Great Again” slogan doesn’t really include Canada. He believes negotiations are about more than just sitting down; it’s about setting the stage for those talks.
Trump has already started shaping public opinion against U.S. trading partners, which could complicate things. Dade thinks the CUSMA review could go one of three ways: they could tweak the deal, the U.S. could pull out, or the worst-case scenario would be the U.S. delaying renewal for a year.
That last option would leave Canada in a tough spot, with the U.S. holding all the cards. Dade fears that the Trump administration could drag its feet on CUSMA’s renewal for years, creating uncertainty for Canadian investments.
Canada is somewhat ready for what’s coming, with negotiators like Ambassador Kirsten Hillman already connecting with Republicans. But Dade feels Ottawa missed some chances to engage with Canadian businesses for insights before the election.
He’s getting a bit frustrated with the federal government’s approach. On the flip side, Lilly believes Canada has been preparing well, with public consultations and outreach to various interests.
But new challenges are popping up, especially with Trudeau planning to step back when a new Liberal leader is chosen. This could leave Canada without a clear voice during negotiations.
Trump’s tariff threats are also going to make it tough for Canada and Mexico to have honest discussions about the trade deal. Lilly thinks that’s going to be a major hurdle.
This report was first published on January 18, 2025, by The Canadian Press.
