The day before the Canada-United States-Mexico (CUSMA) trade agreement July 1 renewal deadline, Prime Minister Mark Carney said that the underlying structure of this agreement remains with 85 per cent of exports protected from Trump’s tariffs. Officials from all three countries met virtually on July 1, where Canada -U.S. Trade Minister Dominic LeBlanc re-iterated support for CUSMA and its renewal. And while officials from the U.S. and Mexico are set to meet the week of July 20 for bilateral trade negotiations, there is no formal date for Canada to do the same. Should we be worried? And what should we expect in the coming months?
While both Canada and Mexico formally declared support for a 16-year extension of the trade deal, President Donald Trump said he thinks the U.S. is better off without CUSMA and he has mused about terminating it. Trump, like his Canadian and Mexican counterparts, could pull the U.S. out of the deal with six months’ notice. This all leaves much uncertainty for Canadian businesses and leaders trying to navigate relations with our southern neighbour.
“We don’t have any more predictability about the annual review process because this is somewhat uncharted territory. It’s not typical for this kind of agreement,” LeBlanc told the Canadian Press earlier in July. LeBlanc added that both Canada and Mexico have asked for more details around the structure for the review process going forward.
While Mexico is preparing to meet with the U.S. for the third round of bilateral negotiations later this month, officials in Canada are waiting for the call. In the meantime, Canada is pursuing other trading partners, though a deal with the U.S. is what many businesses on both sides of the border are seeking.
The U.S. continues to point to the banning of U.S. liquor, supply management with the dairy sector, procurement policies and regulations and the Online Streaming Act as key issues for them. And for Canada, ongoing sectoral tariffs, including on steel and aluminum, plus actions against auto manufacturing and lumber, have been key. On June 3, Ottawa announced it was extending steel and aluminum tariff measures until June 2027 in response to U.S. tariffs.
When Carney last visited the U.S. in May, he addressed business leaders in New York that Canada was focusing on becoming an energy superpower. Those energy resources may be a key bargaining block in future Canada-U.S. trade negotiations.
The U.S. wants Canada’s oil. U.S. Ambassador to Canada Pete Hoekstra told CBC radio in July his country was looking to import more oil. “We’re looking and we’ve made it clear that we’re in the market for three to four million barrels of oil per day. Canada is a logical supplier for that.” Meanwhile, Canada is looking to increase exports to Asia and diversify away from its reliance on the U.S.
So where does that leave the future of CUSMA?
CUSMA remains in place for the next 10 years, requiring a yearly review. If there is no deal to extend CUSMA after 2036, the trade deal expires. However, a lot is apt to change in that time. Trump’s term as president ends in 2028, Mexican President Claudia Sheinbaum’s six-year term ends in 2030, and Carney must call an election by October 2029. While an agreement would alleviate uncertainty and allow businesses to plan and invest, given Trump’s position on CUSMA that is unlikely to happen in the immediate future.
Canadian officials have made it clear they are keen to continue efforts to negotiate a good, modernized CUSMA deal for Canada. For now, this persistence of a good trade deal must remain as Carney and his team prioritize deals with other countries to offset the economic impact of Trump’s tariffs and the uncertainty of a long-term CUSMA deal. If energy–and oil in particular–turns out to be Canada’s strongest card, the question is whether Ottawa is willing to play it before Washington even sits down at the table.
