In a move that could destabilize the North American trade landscape, former President Donald Trump has implemented "reciprocal tariffs" beginning April 2, targeting key industries such as automobiles, copper, lumber, and agricultural products. These actions have sparked significant concern about the future of the Canada-U.S.-Mexico Agreement (CUSMA), which was negotiated during Trump's first administration to replace the North American Free Trade Agreement (NAFTA). The tariffs have prompted Ottawa to retaliate with duties on $30 billion worth of American goods and plan to file claims against the levies through both the World Trade Organization and the CUSMA framework.
The CUSMA, which Trump hailed as the "best agreement we've ever made," is set for a mandatory review in 2026. This review could result in one of three outcomes: the partner nations might recommend changes, modify the agreement for another 16-year term, or one nation could withdraw entirely. There is also a possibility of a 12-month delay if renewal is withheld by any country. The current climate of tariff impositions has cast doubt on the stability and effectiveness of this trade agreement.
“With 25 per cent tariffs, it blows a complete hole in the trade agreement.” – Steve Verheul
Canada's chief negotiator, Steve Verheul, along with Mexico's Ken Smith Ramos, expressed grave concerns over the impact of these tariffs. They described the duties as essentially suspending CUSMA, putting Canada and Mexico in a precarious trading position with the United States.
“It makes it virtually worthless to us. In fact, it leaves Canada and Mexico in a far worse position than any other country in the world practically.” – Steve Verheul
The trade tensions have led to the formation of the Coalition for North American Trade. This coalition, spearheaded by Verheul, Ramos, and Kevin Brady, a Texas Republican and former chairman of the House of Representatives committee on ways and means, seeks to underscore the economic and security benefits of CUSMA amid challenging tariff policies. The coalition partners with a global law firm to advocate for the preservation and enhancement of North American trade relations.
“Canadians think the U.S. is no longer a reliable trading partner,” – Steve Verheul
The imposition of a 25% tariff on all steel and aluminum imports into the United States as of March 12 has exacerbated tensions, stacking additional duties on Canadian imports. This move has further complicated the trade dynamics under CUSMA, which initially sought to solidify relationships between the United States and its largest customers, Canada and Mexico.
Mexico's response to these tariffs has been one of frustration and disbelief. Claudia Sheinbaum stated there is no justification for these decisions that adversely affect both nations.
“there is no motive or reason, nor justification that supports this decision that will affect our people and our nations.” – Claudia Sheinbaum
