Formal discussions between Canada and the United States regarding the review of their free trade agreement will commence in mid-January 2024. This announcement was made by the office of Canadian Prime Minister Mark Carney, who communicated the update to provincial leaders during a meeting.
Dominic LeBlanc, designated as Canada’s lead on U.S.-Canada trade relations, will engage with his U.S. counterparts to initiate these critical discussions. The review focuses on the United States-Mexico-Canada Agreement (USMCA), which is scheduled for reassessment in 2026. The agreement, negotiated during Donald Trump‘s presidency, includes a provision allowing for potential renegotiation.
Carney’s discussions with provincial leaders highlighted the significance of these talks. Canada, heavily reliant on trade, exports over 75% of its goods to the U.S., making the outcome of these discussions vital for the Canadian economy.
The backdrop to these negotiations includes previous tensions, particularly when trade talks stalled in October 2023. This followed an anti-tariff advertisement campaign by the Ontario provincial government in the U.S., which drew criticism from Trump. Carney noted that Canada and the U.S. were on the verge of reaching an agreement on tariff relief in various sectors, including aluminum and steel, before these tensions surfaced.
Trade Relations and Economic Impact
The tariffs imposed by the U.S. continue to affect several sectors in Canada, notably aluminum, steel, automotive, and lumber industries. These sectors have expressed concerns about the financial strain resulting from the current trade environment.
During the meeting, U.S. Trade Representative Jamieson Greer raised issues that are part of a broader dialogue on continental trade. Key Canadian policies related to dairy products, alcohol, and digital services are among the topics that need addressing as part of the upcoming review of the trade agreement.
Carney and the provincial premiers have also scheduled a meeting in Ottawa at the beginning of the new year to further discuss these trade matters. The economic ties between Canada and the U.S. are significant, with nearly $3.6 billion CAD (approximately USD $2.7 billion) worth of goods and services exchanged daily. Notably, Canada supplies about 60% of U.S. crude oil imports and 85% of its electricity imports.
Canada is also the largest foreign supplier of steel, aluminum, and uranium to the U.S., which underscores the importance of a stable trading relationship. Carney pointed out that Canada possesses 34 critical minerals and metals, essential for U.S. national security initiatives, and emphasized that access to these resources is not guaranteed.
“It’s a potential opportunity for the United States, but it’s not an assured opportunity for the United States,” Carney stated, highlighting the complexity of the trade relationship. He noted that Canada has other global partners, particularly in Europe, eager to engage in trade discussions.
As Canada and the U.S. prepare for these discussions, the outcome will likely have lasting implications for the economic landscape of both nations, making it a pivotal moment in their trade relationship.
