Trump's Trade War Puts CUSMA on Life Support
So, here’s the deal—Donald Trump’s latest trade moves have basically torched the Canada-U.S.-Mexico Agreement (CUSMA). The very people who helped put this deal together are now saying it’s as good as dead. Why? Because Trump has slapped massive tariffs—25% on a bunch of Canadian and Mexican goods, and a 10% levy on Canadian energy. This isn’t just some minor policy change; it’s a full-blown economic earthquake.
Canada’s chief negotiator, Steve Verheul, and his Mexican counterpart, Ken Smith Ramos, aren’t mincing words. They say these tariffs make CUSMA practically worthless. In fact, they argue that Canada and Mexico are now in a worse position than if the trade deal never existed at all. Think about that—years of negotiations, only to have it all blown up overnight.
Trump is justifying these tariffs under the International Economic Emergency Powers Act, claiming it’s about stopping fentanyl from crossing the northern border. But here’s the kicker—U.S. Customs data shows barely any fentanyl is coming from Canada. We’re talking about a grand total of 13.6 grams seized in January. That’s less than a handful of sugar. So, yeah, the justification is pretty weak.
Naturally, Canada isn’t taking this lying down. The Trudeau government has hit back with $30 billion in retaliatory tariffs on American goods, with another $125 billion set to roll out in a few weeks. Mexico, meanwhile, is gearing up for its own countermeasures. President Claudia Sheinbaum has already called Trump’s decision unjustified and damaging.
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The timing of all this is no coincidence. The CUSMA agreement is up for review in 2026, and experts believe Trump is trying to shake things up in his usual chaotic fashion. There are three possible outcomes:
- The countries tweak the deal and renew it.
- One of them pulls out completely.
- The U.S. delays renewal, leaving everything in limbo for another year.
Given the current climate, renewing CUSMA seems like a long shot. And honestly, who can blame Canada and Mexico for questioning whether the U.S. is still a reliable trading partner? Verheul himself said that Canadians are losing faith in the U.S. as a trade ally.
This trade war isn’t just a political stunt—it’s already hitting businesses hard. The auto industry, for example, managed to get a one-month exemption after panicking over the new tariffs. But let’s be real, that’s just a band-aid on a bullet wound. If these tariffs stick around, prices will rise, businesses will suffer, and trade relations across North America will be left in shambles.
Bottom line? The trade deal that was supposed to bring stability to North America is now on life support, and Trump’s policies might just pull the plug.
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