By Colin Robertson

December 27, 2025

Negotiations on the future of our trade framework with the Trump administration resume in mid-January. Canadian negotiators will continue to work to renew the continental CUSMA agreement that is the successor to NAFTA. This is the preferred result.

But we must also acknowledge that non-renewal is a possible outcome.

US Trade Representative Jamieson Greer has already served notice that the Trump administration is targeting the Online Streaming Act, dairy exports and dairy supply management, and certain provincial practices on liquor sales, procurement and electricity.

In addition to the first shot across the CUSMA bow represented by Trump’s leveraging of arbitrary, extra-conventional tariff threats against Canada before he was even inaugurated, the pre-positioning of these demands telegraphs that the administration is playing an unprecedented form of hardball.

Once again, as then-Commerce Secretary Wilbur Ross made clear in Trump’s first term, it’s for Canada and Mexico to give and the US to take. But as Prime Minister Mark Carney has countered to underscore Canada’s Newtonian equal and opposite reaction, no deal is better than a bad deal. In other words, we are also willing to walk away.

Those, like the Europeans, who leapt in haste to secure deals after Trump’s ‘Liberation Day’ announcements are already having buyer’s remorse.

For Canada, contingency planning must begin for the possibility that other Canadian exports could be subjected to the tariffs now applied on steel and aluminum, forest products and autos.

Some will argue for retaliation – like the reapplication of the kind of counter-tariffs we applied in the spring – but this would be shortsighted. As we learned, yet again, tariffs are a tax that hurts Canadian producers as well as consumers. In an asymmetrical relationship, retaliation is a blunt and often self-defeating instrument.

Preparing for a post-CUSMA scenario requires a structured, federal–provincial approach involving premiers, business leaders, and organized labour. Adjustment costs will be borne by workers and regions long before they show up in macroeconomic data.

As Prime Minister Mark Carney has countered to underscore Canada’s Newtonian equal and opposite reaction, no deal is better than a bad deal.

This planning should focus on three immediate tasks.

First, supply-chain triage: identifying which cross-border supply chains are most exposed and which are strategically essential.

Second, adjustment capacity: scaling up trade finance, worker transition supports, and regional adjustment tools before they are urgently needed.

Third, market readiness: ensuring that existing trade agreements with the European Union and Indo-Pacific partners are usable in practice, not just celebrated in communiqués.

While multilateralism remains a Canadian instinct, the future increasingly lies in mini-multilateralism—small, purpose-built coalitions like CETA and CPTPP with partners who share interests and capacity.

Trade diversification has been a Canadian talking point for a decade. Under Trump’s second term, it has become a strategic necessity. Bring on the Team Canada trade and investment missions. Prime Minister Carney should continue to make his sales calls around the globe. The premiers should follow suit.

We must further business-to-business deals through matchmaking efforts by our federal and provincial trade commissioner services. It is, after all, business that does business.

Trade promotion for a country like Canada is pragmatic statecraft. We have been a trading nation since before the Hudson’s Bay Company was founded in 1670. The ease and openness with which we have traded with the United States has bred complacency, but our muscle memory as a trading nation hasn’t atrophied. It is still there in our economic DNA.

In other words, trade is not a secondary concern for Canada; it is foundational. Trade accounts for roughly two-thirds of Canada’s GDP with exports alone supporting nearly 3.3 million jobs—about one in six Canadian workers.

Few advanced economies are as exposed to external markets. Our vulnerability lies in concentration. As former NAFTA Chief Negotiator John Weekes recently noted in Policy, 20 per cent of Canada’s GDP is exported to the United States in the form of goods, while only 1.4 per cent of U.S. GDP is exported to Canada. This asymmetry has defined the bilateral relationship, which was not a problem until Donald Trump redefined the relationship.

But our geographic propinquity means some form of trading relationship cannot, in pragmatic terms, be avoided. To use Trump’s language, Canada does possess ‘cards’:

• Canada is the largest export market for 36 U.S. states supporting an estimated eight million American jobs. Canada buys more U.S. goods than China, Japan, and Germany combined.
• With over 35 major electricity transmission lines and 70 oil and gas pipelines crossing our shared border, Canada is the number one supplier of energy to the US. We provide about a quarter of US oil refinery intake, which is more crude oil than Mexico, Saudi Arabia and Iraq combined.
• Producing over 60 minerals and metals, including 21 of the 50 minerals listed as critical by the U.S. Geological Survey, Canada is a leading and most reliable supplier to US agriculture, defence, energy, and communications technology industries.

These facts do not eliminate the asymmetry of our dynamic, but they do matter geo-strategically and politically. They need to be part of every discussion with Americans, especially legislators.

For Trump, trade policy is not primarily about efficiency or rules. It is about leverage, visibility, and domestic politics. Tariffs are not policy failures; they are a cudgel.

Trump’s second term confirms what Carney has already acknowledged: the old Canada–U.S. relationship, built on assumptions of continuity and convergence, is over. In its place stands a more conditional, transactional, potentially hostile partnership, if Donald Trump’s outrageous annexation threats are to be believed.

Canada’s response should not be nostalgia or resistance, but preparation. Governments plan for recessions they hope will not occur and defence contingencies they aim to deter. Trade policy should be no different.

In this new era, reliability flows not from dependence, but from capacity and capability. This requires the discipline to plan for the worst-case scenario.

If it is deemed that CUSMA renewal may no longer be prudent, planning for its failure is not defeatist; it is pro-Canadian.

Policy Contributing Writer Colin Robertson, a former career diplomat, is a fellow and host of the Global Exchange podcast with the Canadian Global Affairs Institute in Ottawa.