Prime Minister Mark Carney has declared that reaching separate, near-term agreements with the United States to reduce tariffs on key Canadian sectors like steel and aluminum is now improbable. Instead, these critical trade discussions are expected to be folded into the broader review of the Canada-United States-Mexico Agreement (CUSMA) scheduled for next year.
Talks Derailed by Ontario's Ad Campaign
The prospect of a standalone deal faded after U.S. President Donald Trump terminated negotiations in October 2024. This move was a direct response to television advertisements funded by the province of Ontario that aired in the United States. The ads featured a clip of former President Ronald Reagan speaking out against the use of tariffs, a message clearly aimed at the Trump administration's trade policies.
"My judgment is that that is now going to roll into the broader CUSMA negotiation, so we're unlikely, given the time horizons coming together, to have a sectoral agreement," Carney stated during a press conference in Ottawa on Thursday, December 18, 2024. He left the door slightly ajar, adding, "Although if the United States wants to come back on that in those areas, we're always ready there — we're very ready."
Forestry and Dairy Remain Key Sticking Points
Carney emphasized that Canada's proposed terms for a sectoral deal remain on the table, but the U.S. side has not re-engaged. He specifically highlighted the ongoing softwood lumber dispute, noting Canada is "very ready on forest products to strike an agreement." The U.S. currently imposes duties and taxes of roughly 45 per cent on imports of Canadian softwood lumber, a point of significant contention for American homebuilders.
On another persistent trade irritant, the Prime Minister reiterated Canada's commitment to its supply-managed dairy sector. This stance was reaffirmed just a day earlier by U.S. Trade Representative Jamieson Greer, indicating the issue will be a focal point in upcoming discussions.
Setting the Stage for CUSMA Negotiations
The framework for the upcoming CUSMA review was established on the sidelines of a major international event. Carney confirmed that he, President Trump, and Mexican President Claudia Sheinbaum set the broad parameters for the process during a meeting at the FIFA World Cup draw event in Washington on December 5, 2024.
This development signals a strategic shift for Canadian trade officials. Rather than pursuing isolated agreements on contentious tariffs, the government will now channel its efforts into the comprehensive CUSMA review slated for 2025. The integration of these sector-specific issues into the larger treaty talks suggests a more complex, but potentially more stable, negotiation path ahead for North American trade relations.
