by Brad Anderson
- USMCA took effect five and a half years ago in July 2020.
- Canada aims to protect its agricultural sector in talks.
- Tariff negotiations will be folded into USMCA review.
As tensions between close trading partners simmer beneath the surface, a key agreement that shapes billions in cross-border commerce is heading back to the negotiation table.
The United States and Canada will begin reviewing their free trade agreement next month. How the talks unfold could have major implications for both countries, as well as Mexico, and they follow a year marked by tit-for-tat measures since Trump began imposing tariffs on much of the world earlier this year.
Resetting the Trade Relationship
Late last week, Canadian Prime Minister Mark Carney confirmed that government officials will meet with their US counterparts in mid-January “to launch formal discussions.” The United States-Mexico-Canada Agreement (USMCA), signed in late 2018 and implemented in July 2020, includes a provision requiring a formal review in 2026.
Read: Canada Could Decide The Fate Of Chinese EV Tariffs As Carney Meets Xi
US Trade Representative Jamieson Greer says the his country has ongoing concerns about access to Canada’s dairy market, particularly regarding Canadian exports of certain dairy products, according to CBC .
He also cited objections to provincial bans across Canada on the distribution of American alcohol, restrictions that were first put in place in direct response to Trump-era tariffs.
Prime Minister Carney says that Canada is committed to protecting its agricultural industry and said he sees “tremendous benefits” in pooling resources with the US, including throughout the automotive, steel, aluminum, and forest product sectors. “We will enter those discussions on the review of [USMCA] in that spirit,” he said.
Can Common Ground Be Found?
The US and Canada had began trade talks a few months ago, but President Trump suddenly cut them off after the Ontario provincial government ran an anti-tariff advertisement.
According to Carney, negotiations were nearing a breakthrough on tariff relief for several sectors, including steel, aluminum, and energy, before the talks were canceled. Those same conversations around lifting tariffs are now expected to be integrated into the larger USMCA renegotiation process.
Canada’s economy is heavily dependent on trade, with roughly 75 percent of its exports going to the United States. It also holds the distinction of being the top export market for 36 US states. Every day, an estimated $2.7 billion worth of goods and services crosses the US-Canada border.
