Canada’s negotiating team is going to need to brush up on The Art of the Deal.
What happened: The U.S. fired the starting gun to renegotiate the Canada-U.S.-Mexico Agreement (CUSMA), opening up 45 days of consultations with businesses ahead of the trade pact’s official review next year.
- CUSMA, which was negotiated during President Trump’s first term, underpins about US$2 trillion worth of annual trade among the three countries.
- Experts say the U.S. is likely to use the renegotiations to push for major concessions from Canada, including better access to dairy and poultry markets as well as more U.S. components in North American cars.
Why it matters: CUSMA has spared Canada from the worst of Trump’s tariff crusade, with around 85% of Canadian exports currently entering the U.S. tariff-free. Unsurprisingly, Ottawa has said maintaining that exemption is a top priority in all negotiations with Washington.
- In 2018, Trump praised CUSMA as “the most important” deal in U.S. history, but more recently he has described it as “transitional” and even called into question whether it needs to be renewed.
Big picture: Canadian companies have struggled with the unpredictability of tariffs, delaying investments and new hires until the trade becomes more stable. A new deal would go a long way toward clearing that cloud of economic uncertainty for businesses.—LA