By Harinder Mahil
If you have been concerned by inflation and rising prices, they are likely to increase significantly after the expiry of the Canada – US- Mexico Free Trade Agreement (CUSMA).
According to press reports the US is asking for what amounts to an “entry fee” from Canada to engage in talks to renew the Trade Agreement.
The U.S. demand was confirmed by former Quebec premier Jean Charest, who was recently appointed by Prime Minister Mark Carney to the new advisory committee on Canada – US economic relations.
In March 2025, Howard Lutnick, the US secretary of commerce reportedly compared gaining access to the U.S. market to buying a Costco membership, stating, “You have to pay before you can shop.” This directly aligns with the “entry fee” narrative that Canada must provide concessions before receiving the benefits of a trade deal. Thus, the U.S. is requiring significant concessions from Canada before formal trade talks can begin.
The US is unhappy with Canada because of its dairy quotas and its policy on the Online Streaming Act and the Online News Act. And, the ban by many provinces on US alcohol is one of their big concerns as well.
The Trump administration is offering Canadian aluminum and steel companies immediate tariff relief if they commit to moving production to the US in the future. Trump is using tariffs to force Canadian companies to move from our communities to theirs. This is not trade; it is economic blackmail.
The US is not acting as a trading partner but as a bully. Canada is likely to have a tough time at the negotiating table.
What are the consequences for Canada if the free trade agreement is not renewed? There is a risk of imposition of tariffs of up to 35 percent on many goods especially impacting sectors like auto, steel, aluminum and forestry. This can lead to a potential decrease of 2.5 percent in Canadian economic activity causing a recession. It can disrupt supply chains and increase prices.
It would also result in a lack of investor confidence, hindering long-term investment, particularly in energy and manufacturing. High-export provinces like Ontario, Quebec, and British Columbia will face the highest exposure to tariffs.
Presently, Trump is preoccupied with his war with Iran and the mess it has created for the entire world. But he will soon be aiming for Canada as the July 1 deadline approaches.
If the US imposed tariffs on Canadian goods, those will contravene its obligations under the World Trade Organization (WTO) Agreement. The Trump administration is sending a signal that shows Canada and other countries that his government will not be bound by America’s treaty obligations, be they multilateral or bilateral. In other words, there are no rules that the U.S. can be expected to follow in ongoing trade relations.
The US can take any number of measures to punish Canada for daring to act like a sovereign country. We should get ready for what may come as a result.
My view is that Canada should be firm at the negotiating table. We should be ready to engage, but not at any cost. Any deal that locks in permanent tariffs or pressures Canadian companies to relocate is a bad deal, and Canada should walk away from it.
Harinder Mahil is a community activist and is secretary of Dr. Hari Sharma Foundation.
