Open this photo in gallery:
U.S. President Joe Biden and Mexican President Andres Manuel Lopez Obrador listen to Prime Minister Justin Trudeau's speech during a joint press conference at the North American Summit in Mexico City on Jan. 10, 2023. Adrian Wylde/The Canadian Press
The crucial North American Free Trade Agreement is once again at risk: it is under review and the US will likely demand changes.
They believe China is trying to avoid the tariffs by using the United States-Mexico-Canada Agreement (USMCA), a successor to the North American Free Trade Agreement (NAFTA) negotiated under President Donald Trump.
It doesn't matter whether Trump or Joe Biden becomes president after the Nov. 5 election: Democratic and Republican leaders alike will likely be prepared to block the agreement's renewal unless Canada and Mexico make new concessions.
Justin Trudeau's Liberal government launched the first all-out strategy to save NAFTA, and it was successful.
It's time to get everyone working together again.
Typically, once all parties sign a trade agreement, the agreement remains in effect until one of the parties withdraws. The USMCA is an exception.
During previous negotiations, the Americans demanded that the new treaty include an expiration clause that would end the agreement on a specific date unless all sides agreed to renew it.
Canada and Mexico opposed, saying it would create too much uncertainty for businesses. In a compromise, all parties agreed to keep the USMCA in place from 2020 until 2036. In 2026, all parties would review the agreement to decide whether to extend the treaty for another 16 years or make changes. If no agreement can be reached on changes, the treaty would expire in 2036.
Since the deal was signed, U.S.-China relations have continued to deteriorate.
“There is bipartisan sentiment on trade with China,” John Dickerman, director of the Washington office of the Canadian Business Council, told me, “and that influences every conversation about trade.”
The US is concerned that China could use the USMCA to circumvent tariffs and gain access to the US market through investments in Mexico, particularly in electric vehicles.
They want Canada to take substantial steps to restrict imports of Chinese products from Xinjiang. Under the Uighur Forced Labor Prevention Act, the United States has returned more than 3,000 shipments from China of products it deemed made with forced labor. Canada's equivalent law is completely ineffective.
The US is expected to demand protections against cheap Chinese imports through the USMCA and to press Canada to implement strong forced labour laws.
Other issues affect the energy, manufacturing and dairy industries. Big questions are whether Canada and Mexico can accept the new U.S. demands and whether Congress is willing to approve any changes.
International Trade Minister Mary Ng and Industry Minister François-Philippe Champagne have visited the United States and spoken about promoting trade between Canada and the United States.
But that's just the beginning. The Canadian government will need to mobilize representatives at all levels of government, business, labor unions, and anyone else who might be able to help, to remind Americans why integrated North American trade will benefit them.
“Sustaining the USMCA is going to be a lot harder than it was when it was originally negotiated,” said Carlo Dade, trade director at the Canada West Foundation, a think tank. “A lot more work is going to have to be done.”
We need to make the case for preserving the USMCA not just in Washington, but in all 50 state capitals, city halls, boardrooms and union halls. Conservative Leader Pierre Poiriervre and his caucus should join this effort.
And Canada needs to change its messaging. “Stop saying that trade benefits everyone,” Dade says. “Americans don't care. What they want to hear is that trade benefits them. And if we don't change our language, we're going to have a problem.”
Joshua Meltzer, a senior fellow at the World Economy and Development Program at the Brookings Institution, a Washington think tank, is cautiously optimistic about the 2026 reassessment, but thinks things will be harder under a Trump presidency than under a Biden presidency.
“I think it will eventually be updated,” he told me, “but I think we're going to be going through a period of pretty significant uncertainty.”
It is time, once again, to use every means at our disposal to convince America of the importance of maintaining North American trade. Our future depends on it.
