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A sudden US trade war has shaken CUSMA, with Trump slapping steep tariffs on Canadian goods. Canadians reel, Americans pay more, and political tensions rise. Can diplomacy save North America’s free trade deal before 2026?
Trade agreement needs redemption
Ottawa: The Canada-United States-Mexico Agreement (CUSMA) has long served as a cornerstone for free trade, fostering economic growth and stability among the three member countries.
By reducing trade barriers, the agreement has allowed Canada, the United States, and Mexico to boost exports, enhance competitiveness, and improve the standard of living for their citizens.
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Everything changed on February 1, 2025, when the United States initiated a trade war against Canada and Mexico. President Donald Trump imposed heavy tariffs on imports from both countries, disrupting the free trade framework that had existed under CUSMA. Canada, in particular, faced a 35% tariff on all goods entering the US, despite many of these items being previously exempt under the existing trade deal.
In addition to the blanket tariffs, the United States imposed sector-specific levies, including a 25% tariff on automobiles and a 50% tariff on metals from Canada. These measures are expected to adversely affect both the Canadian and US economies.
Canadian industries that had previously benefited from low tariffs now face increased costs, while American consumers are seeing higher grocery bills, estimated at an additional $25 per week due to rising import prices.
The Canadian government, led by Prime Minister Mark Carney, has introduced financial relief measures to support sectors most affected by the US tariffs. At the same time, Canadian representatives are actively engaging with US lawmakers, advocating for trade talks to resolve the growing conflict and restore stability to the North American trade relationship.
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The trade war has also had political repercussions in the United States. A Fox News poll indicates that 76% of US voters view the economy negatively, blaming President Trump’s trade policies for their financial difficulties. With the 2026 midterm elections approaching, Trump faces mounting criticism as Americans feel the squeeze on household budgets.
Prime Minister Carney has undertaken a series of international trips to attract foreign investment to Canada, while also working under pressure to find a resolution with the US. Political analysts suggest that the upcoming US midterm elections could play a decisive role in determining the future of CUSMA, potentially restoring the free trade agreement by early 2026.
