{"id":371747,"date":"2025-12-27T17:07:09","date_gmt":"2025-12-27T17:07:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/371747\/"},"modified":"2025-12-27T17:07:09","modified_gmt":"2025-12-27T17:07:09","slug":"north-american-free-trade-is-dead-the-sooner-canada-accepts-that-the-better","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/371747\/","title":{"rendered":"North American free trade is dead. The sooner Canada accepts that, the better"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Even if USMCA survives in some form, Canada should prepare for a very different trade relationship with the U.S.Adrian Wyld\/The Canadian Press<\/p>\n

Lawrence Herman is an international lawyer with Herman & Associates and a senior fellow of the C.D. Howe Institute in Toronto.<\/p>\n

The era of North American free trade is over.<\/p>\n

That point was hammered home by the report on the United States-Mexico-Canada Agreement sent to Congress last week by the U.S. Trade Representative, a prelude to the formal review of the deal set to start in July, but which could get underway earlier.<\/p>\n

While it can be read several ways, the report, and USTR Jamieson Greer\u2019s oral comments, reveal that even if the USMCA continues to tick over during the 2026 review, there will be tough demands by the Trump team for concessions from Canada and Mexico, backstopped by the threat of U.S. withdrawal from the agreement on six months notice.<\/p>\n

In the background is the fact that President Donald Trump has shown hostility to the very concept of North American free trade from the outset, saying a few weeks ago that the U.S. will \u201ceither let [the trade agreement] expire \u2026 or work out another deal with Mexico and Canada.\u201d A few days later, Mr. Greer said the administration is considering breaking up the three-way free-trade agreement and moving toward separate deals instead.<\/p>\n

Carney rejects idea Trump wants to exit USMCA<\/a><\/p>\n

The message from all of this is that Canada should be planning for a future with substantially reworked trading arrangements with the U.S., very different from the existing three-way agreement, even if USMCA survives in some form. While the talks proceed \u2013 with Canada and Mexico on separate tracks \u2013 the agreement will be kept in place, sputtering along, but with the hovering threat of U.S. withdrawal.<\/p>\n

There are bad and less bad elements in this scenario. The bad elements are that duties on Canadian autos, steel, aluminum, copper and other goods will not change while the talks continue. The not-so-bad elements would be that USMCA-compliant goods, like auto parts and some other products, will be able to enter the U.S. duty-free while the two governments try to hammer out new bilateral trade arrangements.<\/p>\n

Given the volatility of Mr. Trump\u2019s trade agenda with its ever-shifting priorities, it is impossible to predict where all this is heading, leaving areas of uncertainty that are bound to affect the financial markets. What does seem certain is that, whatever the outcome in the U.S. Supreme Court on Mr. Trump\u2019s emergency tariffs under the International Emergency Economic Powers Act, Mr. Trump will never agree to bind U.S. duty rates under any deal with Canada, or to forego the use of tariffs for unrestricted national security reasons.<\/p>\n

U.S. targeting dairy, Online Streaming Act in USMCA negotiations, top Trump trade official says<\/a><\/p>\n

In addition, we can kiss goodbye to the binational dispute settlement panel system. While it worked fairly well in the early days of the North American free-trade agreement, it has not had a particularly salutary history in recent years. Even under the Biden administration, the Americans ignored adverse USMCA panel decisions, such as in the auto sector.<\/p>\n

There are a lot of balls in the air on other substantive issues, but leaving aside how any revised USMCA might be packaged, Canada must use every bit of muscle to settle outstanding issues, including U.S. tariffs on steel and aluminum, auto parts, and softwood lumber. Dealing with cyber and border security and supply-managed dairy products are other matters specific to Canada and the U.S. that are substantively different from those with Mexico.<\/p>\n

The Canada-U.S. talks might also cover some key defence issues, notably on the North American Aerospace Defence Command, production sharing and procurement. These are sensitive areas, but closely intertwined with trade.<\/p>\n

All of this envisages a reworked and asymmetrical North American trading framework, encompassing a series of separate U.S. deals with Canada and with Mexico.<\/p>\n

It will take considerable skill on Canada\u2019s part to keep USMCA alive in some way. The downside is that the outcome could be an agreement of reduced scale, replaced by what in essence is a U.S.-centric trading system, far different from the three-way partnership that has been in place since the NAFTA came into effect more than 30 years ago.<\/p>\n

Looking ahead, then, the once heralded and laudable North American free-trade ideal is history. Canada-U.S. relations will proceed mostly on a bilateral basis, consisting of managed trade with quotas in key sectors, possibly within a reworked USMCA that at least provides a framework for stability in commercial dealings. <\/p>\n

It is critical that the Canadian side develops clear, proactive ideas about what a future deal \u2013 or deals \u2013 should look like, rather than reacting to diktats from the U.S. when trade negotiations resume in the new year.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Even if USMCA survives in some form, Canada should prepare for a very…\n","protected":false},"author":2,"featured_media":371748,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[901,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,44,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-371747","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-news","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/371747","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=371747"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/371747\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/371748"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=371747"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=371747"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=371747"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}