Canada's Trade Relationship with US Reaches Critical Juncture
Seven months after winning a national election, Prime Minister Mark Carney finds himself confronting the very economic and diplomatic challenges he promised to resolve. The Canadian economy remains in a fragile state, and the anticipated trade truce with the Trump administration has failed to materialize, creating mounting pressure on the new government.
According to international trade lawyer Barry Appleton, a dual U.S.-Canadian citizen who has testified before governments on both sides of the border, the situation represents only the beginning of potential trade troubles for Canada. Appleton has provided expert testimony to multiple agencies including the U.S. Trade Representative, giving him unique insight into the brewing trade storm.
The Nuclear Option: CUSMA Withdrawal Threat
Canadian industries including automotive and forestry are already feeling significant pressure from existing U.S. tariffs. However, Appleton warns that President Trump hasn't yet deployed what he considers the nuclear trade weapon: threatening to withdraw from the Canada-U.S.-Mexico Agreement (CUSMA) that comes up for review in 2026.
Such a move would immediately grant the United States enormous leverage over its North American neighbors. Appleton argues that following Trump's established playbook, the White House would then make maximum demands of Canada, which sent approximately 75 percent of its goods exports to the U.S. last year.
Washington's wish list is expected to include opening up protected sectors such as dairy and banking, where Canada has historically used regulations to restrict foreign goods and companies. The Americans will ask for everything they possibly can because they've never had such a strong position that they've used, Appleton states bluntly.
Digital Sovereignty and Industrial Strategy Concerns
Appleton identifies digital sovereignty as a particularly worrying area for Canadian negotiators. This includes Canada's ability to regulate digital payments, data, and technology—an area where the Trump administration has previously pushed back against European Union initiatives.
The trade expert contends that in this new global trade order, Canada must revolutionize its approach rather than simply raising fists for retaliation. He references the early Elbows Up defiance campaigns from both Carney and his predecessor Justin Trudeau as insufficient for the current challenges.
What's required instead is smart strategy—real industrial policy and a foundational shift that Canada hasn't seen basically since the Second World War, Appleton emphasizes. Geographic proximity to the U.S. and a weak currency are no longer adequate advantages in this transformed trade landscape.
In a recent interview conducted on November 26, Appleton reflected on lessons learned from the past year of trade tensions. The most important lesson right off the bat was that yes, he will do what he says he's going to do, most of the time. But you've got to take it seriously all of the time, Appleton noted regarding Trump's trade approach.
He characterized Trump's thinking on trade issues as very unconventional compared to his predecessors, advising Canadian officials to accept this reality and develop strategies accordingly. The confrontation demands finesse and flexibility rather than confrontational posturing, suggesting that Canada's comfort level with making Americans, and particularly the president, feel exceptionally loved and comfortable will be a determining factor in negotiations.
