Prime Minister Mark Carney has indicated that hopes for the United States to lift or reduce punitive tariffs on key Canadian sectors before 2026 are now slim. The issue, he said, will likely be folded into the broader, upcoming review of the trilateral trade pact with Mexico.
Negotiations Paused, Timelines Converge
Speaking at a news conference on Parliament Hill in Ottawa on Thursday, December 18, 2025, Carney explained the shift in strategy. He was joined by Ontario Premier Doug Ford for an announcement on infrastructure project approvals.
The prime minister stated that given the time constraints, a separate sectoral agreement on tariffs is now improbable. This follows the suspension of bilateral talks by U.S. President Donald Trump in late October. With both nations now looking ahead to the first mandated review of the Canada-U.S.-Mexico Agreement (CUSMA) in 2026, the windows for negotiation have effectively merged.
"We're unlikely, given the time horizons coming together, to have a sectoral agreement," Carney told reporters. He added, however, that Canada remains prepared: "Although if the United States wants to come back on that, in those areas, we're always ready there. We're very ready."
Deal Was Close Before Talks Halted
Carney revealed that prior to Trump's decision to break off discussions, the two countries were nearing a consensus. The potential agreement would have addressed U.S. tariffs on Canadian steel, aluminum, and energy products.
In a recent interview with the National Post, U.S. Ambassador to Canada Pete Hoekstra confirmed that the negotiations also encompassed uranium. Hoekstra expressed confidence that talks would eventually resume, framing it as a question of timing rather than intent.
Carney's assessment on Thursday was that the tariff issue "is now going to roll into the broader CUSMA negotiation." This pivotal joint review is scheduled to begin on July 1, 2026, marking six years since the agreement replaced the long-standing North American Free Trade Agreement (NAFTA).
CUSMA Review Looms with High Stakes
The upcoming review sets the stage for a critical period in North American trade relations. The process allows the three member countries to discuss extending the pact, proposing specific modifications, or, notably, withdrawing from it entirely.
U.S. Trade Representative Jamieson Greer has recently been conducting hearings to assess the agreement's performance ahead of the 2026 review. Greer has publicly affirmed that U.S. withdrawal remains a possible outcome. Transcripts from his closed-door briefings with congressional committees also outline a list of trade irritants he expects Canada to address during the review process.
The original NAFTA, in effect since the 1990s, was a frequent target of criticism from Trump, who blamed it for U.S. manufacturing job losses. His administration's renegotiation resulted in CUSMA, which is now approaching its first major test since implementation.
