Canada and the United States will commence formal discussions to review their free trade agreement in mid-January, according to a statement from the office of Canadian Prime Minister Mark Carney late Thursday.
The move comes as the United States-Mexico-Canada Agreement (USMCA) is up for review in 2026, potentially opening the door for renegotiations.
Dominic LeBlanc, Canada’s lead on U.S.-Canada trade relations, “will meet with U.S. counterparts in mid-January to launch formal discussions,” Carney’s office said. The talks are crucial as more than 75% of Canada’s exports head south to the U.S., with most exempt from tariffs under the USMCA.
Why These Talks Matter Now
The upcoming discussions are significant as tariffs have been impacting sectors like aluminum, steel, auto, and lumber in Canada. Earlier on Thursday, Carney highlighted that the U.S. Trade Representative Jamieson Greer flagged trade irritants related to dairy products, alcohol, and digital services as part of a “much bigger discussion” about continental trade.
The USMCA, negotiated by President Donald Trump during his first term, includes a clause for possible renegotiation in 2026. This clause has become a focal point for both nations to address ongoing trade concerns.
Notably, in a podcast episode earlier this month, Greer had suggested that President Trump might decide to pull out of the USMCA next year, despite the deal’s text advocating for members to remain until at least 2036.
Trump had abruptly cut off trade talks to reduce tariffs with Canada in October after the Ontario provincial government ran an advertisement critical of the tariffs he had imposed on the nation. It followed an earlier bout of tensions, now eased, over Trump’s insistence that Canada become the 51st U.S. state.
See also: USMCA Key For American Auto Industry’s Competitiveness: Canada PM Mark Carney
Why Canada Trade Is Critical To US
Canada is the largest supplier of steel, aluminum, and uranium to the U.S., and the Pentagon is keen on securing these resources for national security purposes.
About 60% of U.S. crude oil imports are also from Canada, as are 85% of U.S. electricity imports.
The outcome of these talks could significantly impact the nearly C$3.6 billion ($2.7 billion) worth of goods and services exchanged daily across the border.
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