Why CUSMA Is Already Dead And What Should Come Next.

I thought I would bring you up to date on what's really going on with CUSMA, which will be referred to as USMCA going forward. USMCA was negotiated by the first Trump Administration as a replacement for NAFTA, which, at the time, Trump called the worst trade deal ever negotiated by the United States. That comment should have told us all we needed to know about how Trump handles trade disputes: he mostly complains but also bullies to get his way and moves the goalposts at will, and that's precisely what the Administration is doing now. The formal USMCA renewal date is July 1, 2026, with Trump having three options to choose from: the United States can cancel USMCA on six months' notice; it can be reviewed annually over ten years, or it can be renewed for the next sixteen years. 

Anyone who is even mildly sentient already knows what Trump will do because he has telegraphed it multiple times: he wants a bilateral with Canada similar to one already being negotiated with Mexico, but only on a win-lose basis where Canada caves and gives in on supply management, cultural industries, Chinese EVs and a host of other issues. Trump probably already knows that no self-respecting PM could possibly agree to such terms, so, in essence, there goes the potential bilateral. 

So, what should Canada do next? Given the fact that Dom is a lousy negotiator and his boss lives up to the nickname CluelessCarneyTM, from the bottom of my heart, I'll show them the way forward in this country's best interests: under the WTO's GATT trading principles, Canada should put our industries first when it comes to low-cost imports. All tariffs, with the exception of those on our national security industries, should be dropped unilaterally to 0% to serve as a mechanism to cushion Canadian businesses in this new world where there is no longer a trade agreement with the United States. In crucial areas such as steel, aluminum, lumber, auto parts, pork, and canola, the definitive tariff rate would be negotiated between Ottawa and industry representative lobby groups. In short, the rate should be whatever they can live with while still making a respectable profit. These rates would not affect anti-dumping or countervailing duties already in place unless both industry and the government agreed to modifications. 

Broadly speaking, under MFN rules, these 0% tariffs would apply to all WTO member nations except for countries subject to a specific exemption or in cases where an exemption is proposed by the federal government.