Canada's agri-food sector, which supports millions of jobs and billions in investment, enters the formal review of the Canada-United States-Mexico Agreement (CUSMA) on July 1 facing profound uncertainty on multiple fronts, writes Dr. Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University.
US Threatens CUSMA Withdrawal
President Donald Trump has indicated that CUSMA no longer serves American interests and has initiated a process that could lead to a US withdrawal. Whether this is a negotiating strategy or genuine policy is almost beside the point, Charlebois argues: businesses invest based on certainty, not political theatre.
Canada's diversification strategy is also under strain. Just hours before the CUSMA review began, China announced preliminary anti-dumping duties of 73.5% on Canadian pea starch. While the trade affected is modest — roughly $100 million annually, about one per cent of Canada's agri-food exports to China — the symbolic impact is far larger.
Value-Added Processing Under Attack
Pea starch is a value-added ingredient produced in Canadian processing plants after significant investments in technology, manufacturing capacity and skilled labour. It embodies the kind of economic activity successive governments have encouraged: processing crops at home rather than exporting raw commodities. When China targets such products, it undermines the business case for investing in Canada's food processing sector, where the greatest economic returns and highest-paying jobs are created.
“None of this means Canada's effort to rebuild commercial ties with China has failed,” Charlebois writes. Diplomatic relations and trade disputes often move on separate tracks. But it underscores that diversification is not simply about finding another large customer; it is about finding reliable markets.
Mexico Ahead in US Negotiations
Perhaps more concerning, Mexico appears to be further ahead in formal negotiations with Washington than Canada. Ottawa insists discussions continue with American officials, but the perception matters. If Canada's largest trading partner is prioritizing another North American partner while Canada remains largely outside formal negotiations, investors notice.
For the past several months, Canadians have been told that reducing dependence on the United States is both necessary and achievable. However, replacing one dominant market with another equally unpredictable one does not reduce risk; it merely redistributes it.
Uncertainty Defines Canada's Trade Environment
Canada now finds itself in an uncomfortable position. The relationship with China remains vulnerable to abrupt trade actions. The relationship with the United States — destination for roughly three-quarters of merchandise exports — is entering its most uncertain period in years. Mexico appears to be positioning itself advantageously within North America.
For food manufacturers, processors, farmers and investors, uncertainty is becoming the defining feature of Canada's trade environment. Over the past decade, Canada has excelled at announcing ambitious trade strategies, signing agreements worldwide, promoting Indo-Pacific engagement, reopening dialogue with China, and defending CUSMA. Yet success in trade is measured less by the number of agreements signed than by the confidence businesses have to invest.
Restoring Confidence
“Confidence comes from predictability,” Charlebois writes. On this Canada Day, the country's greatest economic challenge may not be choosing between Washington and Beijing. It is restoring Canada's reputation as a country where long-term investment decisions can be made with confidence.
“Our agri-food sector does not need slogans about sovereignty or diversification. It needs dependable trading relationships, coherent policy, and governments capable of turning diplomatic ambition into commercial certainty.”
