Canada is entering a pivotal and potentially perilous phase in its trade relationship with the United States as formal renegotiations of the Canada-U.S.-Mexico Agreement (CUSMA) commence this year. The 2026 review, a built-in feature of the pact, is unfolding under the shadow of former President Donald Trump's return to the White House, setting the stage for high-stakes discussions where Ottawa may be forced to consider "poisonous" concessions on key domestic policies.
From "Gold Standard" to Renewed Scrutiny
In 2020, the landmark trade deal was hailed by then-U.S. Trade Representative Robert Lighthizer as the "new gold standard" for international agreements. Today, CUSMA facilitates roughly US$2 trillion in annual cross-border trade of goods and services and shields the vast majority of Canadian-U.S. commerce from tariffs. Despite this success, the agreement's future is now under a microscope. President Trump has publicly mused about withdrawing from the pact, suggesting he might "either let it expire or we’ll maybe work out another deal with Mexico and Canada," and his administration has floated the idea of separate bilateral deals.
While most trade analysts believe CUSMA will survive the 2026 talks, uncertainty looms. "I expect it to live on," said Scott Lincicome, vice president at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies in Washington, D.C. "But I wouldn’t be shocked if it imploded."
Washington's Three-Pronged Pressure Campaign
The U.S. negotiation priorities became clear when current U.S. Trade Representative Jamieson Greer addressed Congress in late 2025. While the U.S. has a broad wishlist, Greer pinpointed three primary issues with Canada:
1. Dairy Supply Management: This remains the most contentious agricultural issue. Canada's system controls production, sets prices, and restricts imports to protect domestic farmers, which limits access for U.S. dairy producers and results in higher prices for Canadian consumers. The Trump administration is demanding significantly increased access to Canada's dairy market and an end to high tariffs and restrictive import quotas.
2. The Online News Act (Bill C-18): This Canadian law requires large digital platforms like Google and Meta to compensate news organizations for content shared on their services. The U.S. views this as a discriminatory digital measure targeting American tech giants.
3. The Online Streaming Act (Bill C-11): This legislation mandates that streaming services, including major U.S. entertainment companies, contribute to and promote Canadian content. Washington argues it imposes unfair regulatory burdens on American firms.
Public Opinion and Ottawa's Dilemma
The pressure on Canada's supply-managed dairy sector comes as domestic support for the system shows signs of erosion. A March 2025 poll by the Angus Reid Institute revealed that nearly a third (29%) of Canadians supported scrapping supply management entirely, while another 26% wanted it reduced or suspended to help ease inflationary pressures. Only 23% of respondents preferred to keep the system as is, with the rest unsure.
This data highlights the difficult political calculus for the Canadian government. Conceding significant ground on dairy could provoke fierce backlash from a well-organized farming sector and certain regional constituencies. However, resisting all U.S. demands could jeopardize the entire trade framework, risking the 85%+ of Canadian-U.S. trade currently protected under CUSMA from punitive tariffs.
The digital policy demands present a different challenge, touching on issues of cultural sovereignty, the viability of the domestic news industry, and the regulation of the global digital economy. Ottawa has framed these laws as essential for supporting Canadian culture and media, setting up a fundamental clash with the U.S. perspective on free digital trade.
As negotiations intensify throughout 2026, Canadian officials will be walking a tightrope. Their task is to preserve the immense economic benefits of CUSMA while minimizing what trade experts warn could be politically toxic concessions on policies deeply embedded in Canada's agricultural and cultural landscape. The outcome will define the North American trade relationship for the next decade and test Canada's resilience in dealing with an unpredictable and aggressive U.S. administration.
