The warning signs were there all along. While Canadian officials have insisted for months that the CUSMA trade agreement is working well, Donald Trump’s campaign team has been strategizing its dismantling since before he secured the Republican nomination.
Standing outside an automotive plant in Michigan last week, Trump vowed to impose sweeping tariffs on Canadian imports if reelected. “We’ll make them pay until they negotiate fairly,” he declared to cheers from workers who blame free trade for their economic struggles.
Ontario Premier Doug Ford broke ranks with federal counterparts yesterday, acknowledging the gravity of potential CUSMA renegotiations. “We need to prepare for economic turbulence,” Ford stated during a press conference in Toronto. “When Trump talks tariffs, history shows he means business.”
The Canada-United States-Mexico Agreement, which replaced NAFTA in 2020, faces an automatic review in 2026. But Trump’s team suggests they won’t wait that long if he wins in November. Former U.S. Trade Representative Robert Lighthizer, expected to return to Trump’s cabinet, has already outlined an aggressive approach to extract further concessions from Canada.
At stake is approximately $1.3 trillion in annual trilateral trade and millions of jobs across North America. The Bank of Canada estimates that disruption to the agreement could shave up to 2% from Canada’s GDP within 18 months—a recession-level impact.
“We’re staring down potentially the most significant economic challenge since the pandemic,” said Goldy Hyder, president of the Business Council of Canada. “Companies are already scenario planning for supply chain disruptions that would follow Trump’s return.”
Canadian industries most vulnerable include automotive manufacturing, agriculture, and energy. Trump’s campaign has specifically targeted Canada’s dairy management system and softwood lumber exports, while demanding increased American access to Canadian markets without reciprocal benefits.
Mexico faces similar pressures, with Trump threatening 25% tariffs unless Mexican officials stem migration across the southern U.S. border. “He’s using trade as a weapon for immigration policy,” noted Martha Bárcena, former Mexican ambassador to the United States.
What makes this moment particularly concerning is the absence of coordinated Canadian preparation. While Ford sounded alarms, Deputy Prime Minister Chrystia Freeland maintained a different tone during her appearance before the House trade committee. “CUSMA works well for all three countries,” she insisted last month.
This disconnect worries trade experts like Lawrence Herman of Herman & Associates, who served as counsel during original NAFTA negotiations. “We’re witnessing dangerous complacency at the federal level,” Herman told me during an interview at his Toronto office. “The time to build cross-border alliances with U.S. importers dependent on Canadian goods is now, not after election day.”
Internal documents obtained through freedom of information requests reveal Canadian intelligence assessments predicting Trump would target the trade relationship regardless of actual economic data. “Perception matters more than reality in this scenario,” one redacted briefing note states.
For communities like Windsor, Ontario, where one in four jobs connects to cross-border trade, the stakes couldn’t be higher. At a tool and die shop near the Ambassador Bridge, owner Maria Gonzalez showed me order sheets from Michigan automotive suppliers. “Everything we make crosses that bridge,” she said, pointing toward the Detroit skyline. “If tariffs come, half these orders disappear overnight.”
The situation creates a diplomatic dilemma for Prime Minister Justin Trudeau, who endured difficult negotiations with Trump during the first administration. According to Global Affairs Canada officials speaking on background, the strategy appears to be avoiding public confrontation while quietly preparing contingency plans.
Those plans likely include identifying potential retaliatory tariff targets that would impact Republican-voting states without hurting Canadian supply chains—a nearly impossible balance to strike given integrated manufacturing processes.
The White House under President Biden has attempted to reassure Canadian officials privately that existing trade frameworks remain valued, according to sources familiar with diplomatic communications. However, Biden’s influence over trade policy diminishes daily as the election approaches.
Canadian businesses aren’t waiting for government guidance. A survey by Export Development Canada found 63% of exporters are diversifying away from U.S. markets, a challenging pivot given geography and historical trade patterns.
“We spent generations building integrated continental supply chains,” explained Dennis Darby, president of Canadian Manufacturers & Exporters. “Unwinding them causes damage on both sides of the border, but especially for smaller Canadian producers who lack alternatives.”
The reality is that Canada faces asymmetric negotiating power. While 75% of Canadian exports go to the United States, only 18% of U.S. exports come north. This imbalance grants Trump significant leverage if he chooses to exploit it.
As Premier Ford noted in his uncharacteristically blunt assessment, “We need to be realistic about our position and prepare accordingly.” Whether federal officials follow his lead in acknowledging the threat remains to be seen.
