Canada stands at a critical juncture for its economic future as pivotal trade negotiations with the United States and Mexico intensify. The Canada-United States-Mexico Agreement (CUSMA) faces a trilateral joint review on July 1, 2026, placing one of history's most mutually beneficial trade relationships under scrutiny. Linda Hasenfratz, in a compelling analysis, argues that Canada's ability to secure a favourable agreement will define its economic resilience for decades to come.
The Foundation of Canadian Prosperity
Canada's economic prosperity is fundamentally built upon free trade, with the partnership with the United States standing as the most crucial. More than 75 per cent of Canadian exports in 2024 went to the U.S., making it Canada's largest and most accessible export market. For perspective, no other country accounted for more than five per cent of Canadian export volumes last year.
Our economies, supply chains, and workforces are deeply intertwined, creating a symbiotic relationship where both nations thrive when trade flows freely. Despite political rhetoric suggesting otherwise, Canada remains vitally important to the United States. The U.S. actually sells more goods and services to Canada than it receives, and Canada serves as the largest customer for 36 American states.
Immediate Threats and Solutions
Recent challenges have threatened this stable trading relationship. New U.S. tariffs, particularly the Section 232 tariffs on autos, steel, and aluminum, have created significant uncertainty for businesses, workers, and communities anchored by manufacturing and agriculture.
Hasenfratz identifies urgent priorities for the Canadian government. The immediate focus must be negotiating interim measures to remove the 232 tariffs on autos, metal, and metal derivatives. Potential solutions include increasing regional value content (RVC) requirements and potentially agreeing to minimum U.S. content in vehicles if necessary. The author poses a critical question: Are we really willing to sacrifice vehicle manufacturing in Canada to continue protecting certain sectors?
Looking Beyond CUSMA: Canada's Global Potential
While securing a renewed CUSMA agreement is essential, Hasenfratz emphasizes that this represents just the starting point for Canada's trade strategy. The country must simultaneously strengthen connections to global markets to ensure long-term prosperity.
Canada possesses remarkable advantages that position it for global success. The nation's abundant natural resources—including energy, minerals, water, and farmland—account for nearly 20 per cent of Canada's nominal GDP. Complementing these resources is a highly skilled, productive workforce and a rapidly growing artificial intelligence technology sector that transforms manufacturing daily.
Canada has demonstrated robust economic performance, with productivity growth exceeding 50 per cent over the past 25 years when excluding government and not-for-profit workers. Notably, Canadian manufacturing productivity has consistently outpaced the United States for more than a decade.
With free trade agreements already established with 56 countries representing 65 per cent of the world's economy, Canada has a strong foundation for global trade expansion. The growing global demand for Canadian goods presents unprecedented opportunities, and how quickly Canada modernizes its trade policy will determine its ability to capitalize on these prospects.
Hasenfratz concludes with a powerful call to action: Canada must pursue pragmatic, focused negotiations that deliver results for both Canadians and Americans while simultaneously expanding global market connections. The time for decisive action is now to secure long-term economic resilience and prosperity.
