Canada and the US to launch formal talks to review free trade agreement in January

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Canada and the United States are set to begin formal discussions to review their free trade agreement in mid-January, according to a statement from Canadian Prime Minister Mark Carney’s office. Dominic LeBlanc, the country’s representative for U.S.-Canada trade relations, will meet with U.S. counterparts to kick off these discussions.

The United States-Mexico-Canada trade pact (USMCA) is scheduled for review in 2026, as negotiated by President Donald Trump during his first term. Trump included a clause allowing for possible renegotiation of the deal in 2026.

Carney recently updated provincial leaders on the progress of trade talks with the U.S. Canada heavily relies on trade, with over 75% of its exports going to the U.S. Currently, most of Canada’s exports to the U.S. are exempted under USMCA.

Trade talks between Carney and Trump hit a roadblock in October when Trump cut off discussions to reduce tariffs after an anti-tariff advertisement ran in the U.S. tensions had eased following previous disagreements over Trump’s suggestion that Canada should become the 51st U.S. state.

Carney mentioned that Canada and the U.S. were close to an agreement on sectoral tariff relief, particularly in areas like steel and aluminum, which have been negatively impacted by tariffs. The upcoming review of the Canada-U.S.-Mexico trade deal will focus on resolving U.S. concerns about Canadian policies on dairy products, alcohol, and digital services.

In a joint decision, Carney and provincial premiers agreed to meet in Ottawa early next year. Canada is a crucial trading partner for the U.S., as it is the top export destination for 36 U.S. states. The two countries exchange nearly $3.6 billion Canadian (US$2.7 billion) worth of goods and services daily.

Moreover, Canada plays a significant role in supplying the U.S. with crude oil, electricity, steel, aluminum, uranium, and critical minerals. Carney emphasized that U.S. access to Canada’s critical resources is not guaranteed, as other global partners, like those in Europe, are also interested in trade opportunities.

The trading relationship between Canada and the U.S. is vital for both countries, and ongoing discussions will shape the future of their economic ties.