The United States and Canada are preparing for high-stakes trade negotiations next month, potentially reshaping billions of dollars in cross-border commerce. The review of the United States-Mexico-Canada Agreement (USMCA) comes amid lingering trade tensions and could lead to significant shifts in how both countries handle key sectors like automotive, dairy, and energy.
The Road to Renegotiation
The USMCA, signed in 2018, includes a mandatory review process starting in 2026. US Trade Representative Jamieson Greer has signaled Washington’s ongoing concerns over Canadian dairy market access, specifically regarding exports of certain dairy products. Additionally, the US objects to provincial restrictions on American alcohol distribution – measures initially imposed in retaliation for tariffs under the Trump administration.
Canadian Prime Minister Mark Carney affirmed Canada’s commitment to protecting its agricultural industry while emphasizing the potential for expanded cooperation with the US in sectors like automotive, steel, aluminum, and forestry.
Why This Matters
The upcoming review isn’t just about dairy and alcohol; it’s about the future of a deeply intertwined economic relationship. Canada relies heavily on trade with the US, sending roughly 75% of its exports south of the border. The US also depends on Canada: it is the top export market for 36 US states.
Daily, an estimated $2.7 billion in goods and services flows across the US-Canada border, making this one of the world’s largest trading partnerships. Disruptions could ripple through supply chains and consumer prices on both sides.
A History of Stalled Progress
Previous trade talks between the US and Canada stalled earlier this year when President Trump abruptly ended negotiations after an Ontario provincial government ad ran against his tariffs. According to Prime Minister Carney, those talks were close to a breakthrough on tariff relief for sectors like steel, aluminum, and energy before being cut off.
Now, those same conversations are expected to be rolled into the broader USMCA review process. The key question is whether both sides can find common ground despite unresolved disputes and a history of escalating tensions.
The upcoming negotiations will test both countries’ willingness to compromise. Failure to reach an agreement could lead to further protectionist measures, disrupting trade flows, and potentially harming businesses and consumers in all three USMCA nations.
