As Prime Minister Justin Trudeau initiated his first phone call with re-elected U.S. President Donald Trump on November 6, 2024, he was acutely aware of the president's intentions to revisit the Canada-U.S.-Mexico Agreement (CUSMA). A briefing note prepared ahead of the conversation indicated that Trump was unlikely to await the formal 2026 review of the trade pact, highlighting Canada's interest in keeping this review as "narrow and targeted as possible."
The document, partially redacted and obtained through the Access to Information Act, provided Trudeau with strategic talking points and suggested he congratulate Trump on his "historic election win." The notes advised Trudeau to express eagerness to collaborate with Trump on trade and economic matters, with specific emphasis on CUSMA, the safeguarding of pipelines, and the fortification of supply chains to diminish reliance on "hostile states."
Furthermore, the briefing emphasized that "economic security will be a front-burner issue for a Republican Administration," intertwining economic policy with national security considerations. Subsequent to their call, a readout from Trudeau’s office mentioned discussions regarding the enduring partnership between Canada and the United States, as well as mutual interest in maintaining secure and reliable supply chains while tackling unfair trade practices globally.
However, tensions escalated shortly thereafter as Trump threatened to impose significant tariffs on Canada, first making this threat on November 25, 2024. This was directly linked to concerns over fentanyl trafficking across the border, despite U.S. government data revealing that the volume of fentanyl coming from Canada was minimal. A subsequent Annual Threat Assessment report did not cite Canada in terms of illicit drug issues involving fentanyl.
Trudeau and Trump continued their dialogue, which included a visit by Trudeau to Trump's Mar-a-Lago resort in Florida aimed at mitigating the threat of tariffs. In response to the looming tariffs, Canada enhanced its border enforcement mechanisms, but ultimately faced damaging duties, including a 25 percent tariff on various goods and a 10 percent tariff on Canadian energy supplies, with a portion of these tariffs being suspended shortly thereafter.
Additionally, Trump moved forward with a blanket 25 percent tariff on all steel and aluminum imports, affecting Canada directly. In a recent Senate intelligence committee hearing, Tulsi Gabbard, the U.S. director of national intelligence, acknowledged Mexico as the primary fentanyl risk, asserting that she lacked concrete figures regarding Canada’s involvement in the issue.
Trump has consistently expressed grievances over trade deficits and has ominously suggested potential economic maneuvers to integrate Canada as a U.S. state. Canadian officials have voiced concerns that these tariffs could destabilize the Canadian economy, making it more vulnerable to annexation efforts.
Experts have interpreted the U.S. tariffs as efforts to unsettle both Canada and Mexico in anticipation of the mandatory review of CUSMA. Trump's ongoing and inconsistent tariff threats have drawn parallels to the contentious negotiations that characterized his first administration concerning the original North American Free Trade Agreement (NAFTA). He had previously considered a 25 percent tariff on the Canadian auto sector during the 2018 discussions, though this never materialized, while imposing 25 percent tariffs on steel and 10 percent on aluminum imports utilizing national security powers.
Almost a year following these tariff implementations, Canada and Mexico successfully negotiated exemptions, culminating in the establishment of a new trilateral trade agreement to supersede NAFTA.
