The formal review of the Canada-United States-Mexico Agreement is set to conclude by July 1, 2026, and the stakes for Canadian importers and exporters could not be higher. Approximately 90 percent of Canadian exports currently qualify for CUSMA exemptions, shielding them from the new US global tariff that took effect on February 24 after the Supreme Court struck down the previous IEEPA-based tariffs in a 6-3 decision. The Trump administration responded by imposing a 10 percent baseline tariff under Section 122 of the Trade Act of 1974, with US Trade Representative Jamieson Greer signaling that rates will rise to 15 percent or higher for some nations.
Greer stated publicly that tariffs will be a non-negotiable element of any renewed agreement with Canada, specifically pointing to Canadian dairy market access and calling for a “fundamental rewrite” of CUSMA to bring industrial production back to the United States. Meanwhile, Canada’s Trade Minister Dominic LeBlanc indicated that Ottawa is pursuing bilateral deals on steel, aluminum, and energy alongside the trilateral review, and that private conversations between the three governments have been “not discouraging.” A Canadian trade delegation is expected to meet Greer in Washington in coming weeks.
The range of outcomes remains wide. Oxford Economics has modeled scenarios ranging from a renegotiated agreement with moderate tariffs to a severe adverse case where the United States withdraws entirely, potentially imposing 35 percent tariffs on most Canadian goods and triggering a recession in early 2027. For now, sector-specific tariffs on steel, aluminum, and automobiles under Section 232 remain in effect regardless of the CUSMA review, and the Supreme Court ruling has introduced a parallel wave of uncertainty as companies including FedEx pursue refunds on an estimated US$175 billion in tariffs previously collected under IEEPA.
