Trade Minister presses Washington on CUSMA review as tariffs rattle Canadian trade
Canadian exports to the US fell 5.8 percent last year – and the CUSMA showdown is only just beginning.
Prime Minister Mark Carney calls the shift in the relationship a “rupture.”
A series of tariffs, a looming CUSMA review, and a deliberate push toward “middle power” alliances are now setting the backdrop for Canadian markets and cross‑border flows.
According to BNN Bloomberg, the Canada–US–Mexico Agreement has shielded Canada from the worst impacts of US President Donald Trump’s tariffs, but he has repeatedly questioned whether CUSMA should continue.
Canada’s Trade Minister Dominic LeBlanc will meet United States Trade Representative Jamieson Greer in Washington to discuss the upcoming mandatory review of CUSMA and other bilateral concerns, a day after the US announced bilateral “scoping” talks with Mexico on the pact.
BNN Bloomberg notes that CUSMA’s review sets up a three‑way choice for July: renew the deal for another 16 years, withdraw from it, or signal both non‑renewal and non‑withdrawal, which would trigger annual reviews that could keep negotiations going for up to a decade.
Some have suggested that a contentious Canada–US relationship could see the US and Mexico begin negotiations with Canada on the sidelines, echoing the original CUSMA talks.
In his book, former US trade representative Robert Lighthizer wrote that the US and Mexico reached agreement and “Canada was welcome to join if it wanted,” but Washington and Mexico City were “prepared to move forward bilaterally if it did not.”
The political backdrop has become sharply strained.
BNN Bloomberg reports that the Canada–US relationship has been upended by Trump’s tariffs and threats of annexation.
Prime Minister Carney said in Australia that CUSMA “effectively has been broken in the short term by US actions” and that Canada is looking to this year’s review to “re‑establish the trust” that individuals, businesses and investors need to guide trade between the nations.
Trade talks between Canada and the US stalled last October after Trump was angered by an Ontario‑sponsored ad quoting former president Ronald Reagan criticizing tariffs.
Despite that freeze, BNN Bloomberg reports that LeBlanc and Greer continued to communicate by phone.
Canada started domestic CUSMA consultations last year, but Ottawa has not formally launched anything with the US.
Greer said last month that Canadians have barriers that make it difficult to hold bilateral trade talks, telling Fox Business, “They refuse to sell US wine and spirits on their shelves,” and that this creates “a big challenge and an obstacle for starting real negotiations with them.”
On the tariff front, a BNN Bloomberg opinion piece by Christopher Liew notes that the US first imposed broad 25 percent tariffs on most Canadian goods under the International Emergency Economic Powers Act in February 2025, then added sector‑specific duties under Section 232 targeting steel, aluminum, automobiles, lumber and furniture.
As CTV News recently reported, many levies still hit Canadian industries even after the US Supreme Court struck down the IEEPA tariffs in a 6–3 decision on Feb. 20, 2026.
According to that BNN Bloomberg piece, within hours of the ruling, Trump announced a replacement 10 percent global tariff under Section 122 of the Trade Act of 1974, effective February 24, and threatened to raise it to the 15 percent maximum allowed under that law.
These Section 122 tariffs are time‑limited to 150 days unless Congress votes to extend them.
Liew wrote that tariffs have dragged down production and employment in key sectors such as autos and steel, which now trail the wider economy.
With about “88 percent of Canadian energy still flowing south,” he said even a 10 percent tariff would squeeze costs across the industry.
At the same time, markets have held up.
Liew noted that even after a year of tariff escalation, the S&P/TSX Composite Index reached a record 33,817 on February 20, the day of the Supreme Court ruling, and was still more than 36 percent higher year‑over‑year by late February, according to S&P Dow Jones Indices.
He argued that much of the tariff shock was absorbed in early 2025, as companies adapted through CUSMA compliance, supply chain adjustments and trade diversion.
A Bloomberg newsletter reported that exports to the US dropped 5.8 percent last year, led by lower volumes of vehicles, steel, aluminum and forestry products.
The export hit dragged real GDP growth down to 1.7 percent, the lowest rate since the economy shrank in 2020, though Canada still avoided recession.
New US import taxes apply to only a small portion of goods crossing the border because of exemptions for products compliant with CUSMA, giving Canada one of the lowest effective US tariff rates.
Against that backdrop, Carney is widening Canada’s options.
According to Reuters, he said in New Delhi that India and Canada will aim to conclude a free trade pact by the end of this year, after ties deteriorated sharply in 2023.
New Delhi and Ottawa hope to lift bilateral trade to $50bn by 2030 from nearly $9bn in 2024–25, and that the two sides agreed to terms of reference on a comprehensive economic partnership.
They also agreed on a $2.6bn uranium deal and cooperation on small modular and advanced nuclear reactors.
Carney has used his stops in India and Australia to promote “middle power” coalitions.
The New York Times reported that he told Australia’s Parliament, “Canada and Australia cannot compel like the great powers, but we can convene, set the agenda, shape the rules, and organize and build capacity through coalitions to deliver results at speed and global scale.”
Bloomberg reported that he argued Canada and Australia have earned the credibility to lead such efforts “because others know we mean what we say and we will match our values with our actions,” and that both countries are advancing agreements on critical minerals, defence technology and a modernized tax and investment treaty.
