By Fen Hampson

December 24, 2025

As we approach 2026 and Donald Trump’s second year of trade belligerence, one thing is clear: Canada cannot afford to drift into the looming USMCA (CUSMA) renewal talks as a supplicant.

President Trump wants us to twist in the wind amid the combined leverage of punitive sectoral tariffs on steel, aluminum and softwood lumber and his pointed threats to walk away from CUSMA unless Ottawa capitulates to his terms.

The time has come to signal—quietly but unequivocally—that Canada is, with all the due diligence required of such circumstances, preparing for Trump’s nuclear option: the end of CUSMA, the core of which is unfettered trade in manufactured goods of which autos is the largest subsector.

While expressing Canada’s strong support for productive and constructive negotiations, Canada’s new ambassador to Washington, Mark Wiseman, must also telegraph our response to any collapse of the CUSMA core to the White House and senior U.S. officials.

That message must emphasize that while Canadians would absorb serious short‑term pain, the United States will also face a systemic shock that reaches far beyond disrupted supply chains to knock-on effects on investment and sharply higher costs for U.S. producers and consumers as a result of the actions we would take. In other words, call Trump’s bluff.

The only country that has wrestled a substantive trade agreement out of Trump’s grip is China. It did so by playing unrelenting hardball—a reminder that if you do not push back, he will simply eat your lunch.

Trump needs to understand that treating Canada as a throwaway trading partner is the economic equivalent of writing off the entire economy of the state of the California.

His team is already sketching a “to‑do” list for the 2026 review that reads like a catalogue of grievances rather than a basis for serious negotiation.

The list that U.S. Trade Representative (USTR) Jamieson Greer laid out in his December 18^th briefing to Congress details the high-friction points in the relationship such as inter alia dairy supply management; Canada’s Online Streaming Act (Bill C-11) and Online News Act (Bill C-18), which the U.S. considers discriminatory against American tech firms; and provincial bans on U.S. alcohol products.

What should worry us is not what’s on Grier’s list, but what’s not. It starts with the administration’s clear desire to re-shore all manufacturing to the U.S.—autos and everything else, including steel, aluminum, copper, farm equipment, construction equipment, etc.

In addition, we will face demands to dismantle Canada’s financial‑sector safeguards as well as protections for our communications, transportation and financial infrastructure sectors.

At the same time, Trump’s 2025 National Security Strategy effectively folds Canada’s critical minerals and strategic resources into a U.S. security perimeter, directing U.S. agencies to identify “strategic points and resources in the Western Hemisphere” for protection and “joint development.”

Trump needs to understand that treating Canada as a throwaway trading partner is the economic equivalent of writing off the entire economy of the state of the California.

In practice, that could translate into pressure on Canada to gear production, refining, investment rules and even ownership decisions to U.S. military and industrial requirements, while reserving to Washington a de facto veto over Chinese or other non‑favoured investment in our resource sector.

In other words, Trump’s economic and security plans left unchecked could ultimately serve as a Washington-run version of China’s Belt & Road initiative, whose resource extraction, supply chain, political and geopolitical impacts have been such a significant driver of the global power shift away from democracy and toward an autocratic world order.

Simply put, capitulating to these demands in a hollowed-out CUSMA is not in Canada’s long-term interest.

A credible walk-away strategy must spell out the levers that Canada is prepared to pull if CUSMA collapses, backed by concrete estimates of the losses it would impose south of the border. Among them:

• Effectively halting imports of all U.S. manufactured goods, including vehicles, wiping out tens of billions in sales. We need to signal clearly that we can substitute all U.S. manufactured goods from Europe and Asia.
• Imposing a “border travel fee” on Canadian travelers to the United States, threatening over $20 billion in U.S. tourism revenues tied to Canadian visitors.
• Systematically diversifying away from U.S. agriculture by locking in multiyear food import contracts from Mexico, South America and elsewhere, displacing tens of billions in U.S. farm exports to Canada.
• Canada should further declare that its 34 identified critical minerals—nickel, lithium, uranium and others—will be treated as sovereign security assets and not open to U.S. ownership.
• Canada will develop its own defence industry and source critical weaponry from elsewhere.

Trump must understand that he will be facing a systemic hit of tens of billions in lost export sales and the resulting impacts on American farmers, industry and investors.

Canadians must make clear that this is not the path we seek, but it is the path we will be forced to take if Trump insists on turning Canada into a punching bag to hollow out CUSMA rather a rules‑based partnership.

Once Wall Street, the Pentagon and the governors of the 36 states for which Canada is a top export market run the same numbers, they will become our most forceful advocates for restraint.

That is the message Canada’s new ambassador must carry—calmly but firmly—to New York, Washington and the American heartland, before the 2026 talks begin in earnest.

Policy Contributing Writer Fen Osler Hampson is a chancellor’s professor at Carleton University and co-chair of the Expert Group on Canada-U.S. Relations.