The Current - What’s the future of the Canada-US-Mexico trade deal?

Episode Date: December 5, 2025

At hearings in Washington, American business groups say that, despite some irritants, they like North American free trade. But U.S. President Donald Trump says he's willing to walk away from the three-way deal, if Canada and Mexico don't bend to his demands.

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Donate at lovescarbro.cairbo. This is a CBC podcast. Hello, I'm Matt Galloway, and this is the current podcast. Today is a very big day in Washington, D.C. The Prime Minister Mark Carney is there for the FIFA World Cup draw. We'll hear more about that coming up later on in the program. But while he's in town, he's going to meet with U.S. President Donald Trump on the sidelines. That brief face-to-face chat takes place in the midst of tariff tensions

and against the backdrop of hearings on Capitol Hill on the Canada-U.S. Mexico trade deal. That pact, known as Kuzma here in Canada and USMCA in the United States, is up for a mandatory review next summer. Here is what President Trump said to reporters earlier this week about the future of that deal. It expires at about a year and we'll either let it expire or we'll maybe work out another deal with Mexico and Canada. But look, Mexico and Canada have taken advantage of the United States, like just about every other country, at all fairness. Now, this deal does not actually expire in a year, but any country can withdraw from it at any time with six months notice. And on the 1st of July, when the formal review happens, each country must declare whether it wants to extend the deal or renegotiate its terms.

Most of the voices at the hearings this week in D.C. support the trade pact, but that does not mean that there are some points of tension, among them, dairy. For years now, American farmers have complained that they don't have fair access to the Canadian market. Pete Kaplanman is a dairy farmer in two rivers, Wisconsin. His farm has about 400, had a cattle. It's now being run by him and his kids. Pete is also part of the leadership of the land of lakes farm cooperative, and he joins us now. Pete, good morning. Good morning, Matt.

How has this trade pact worked out for you and other farmers in Wisconsin? Well, I think when originally negotiated five years ago, we were optimistic. We're, you know, we recognize that Canada has a different system for its dairy producers and pricing. But we were excited about the somewhat limited market access, but, you know, we're good neighbors, we're close, and we're looking forward to it. But that's not quite come to fruition. And so what went sideways from your perspective? Well, it's two parts, really. One is market access, and recognizing that when there's a quota system that impacts the production capacity, there are higher prices, right?

So getting access to the Canadian market, and what was negotiated was about 3.5 percent, and those tariff rate quotas, so those import licenses, if you will, went to, primarily to manufacturers who have no incentive to import any cheese. So what sort of a difference would access to the Canadian market meat for a farm like yours? Well, you know, a lot of our farm being in Wisconsin and Atlanta Lakes farmers, a lot of our farmers being in the northern states, so Minnesota, Wisconsin, New York, Pennsylvania, it's an attractive market and it's a significant market. We have in this country what is known as supply management that protects Canadian farmers. Do you want that system scrapped?

As a U.S. dairy farmer, no, I don't. And I, you know, I want to call out, I have Canadian farmer friends and friends who work for some of the dairy processing companies in Canada. And it's a difference, it's a very different system, which requires there's costs that come along with trying to maintain that higher pricing. structure of the of the supply management system but as a producer we don't we don't want to see that taken down i never want to see a dollars taken away from a dairy farmer regardless of what country they live in but um we do have uh rules negotiated to our agreement to our kusma agreement and we'd like to see those um rules lived by why why is that three and a half percent the the the share of the Canadian market that you and other American farmers were promised.

Why hasn't that been fulfilled, do you think? Well, there's, the access to those import licenses has not gone to the retailers, the food service providers, the importers, who would have incentive to import our product. So the opportunity to import has not been given to the people who have incentive to use. it. So the conversations that are happening now are about the benefits in some ways of this deal, but also perhaps predicting how the more formal conversations will go next summer. What would you want to see come out of the full renegotiation?

What are you looking for when it comes to what this trade deal might look like in future? Well, we'd like to see the, there's really those two parts. One, the market access. We'd like to really actually have access to the market because it's not actual live or real market access right now because of who the licenses go to. And there's also one of the costs of a supply management system is that there's a price is not so significantly above global prices at. when there's a surplus, the country has to get rid of it some way. And there's also then surplus dairy proteins that are dumped on the world market below world market prices, which actually lower my prices because my prices do depend on world

market prices. Your president has complained about tariffs that Canada put on any American dairy imports above the quotas. He says that this is unfair and the Canada is ripping off the United States. And he's making this noise. about walking away from the trade pact altogether, just before I let you go. I mean, is that sort of talk helpful to you in terms of what you're looking for?

We in agriculture and as dairy farmers believe in the value of and the importance of this trilateral agreement to North America, frankly. We're close neighbors, and I believe we're good neighbors. We need to maintain that agreement. And we need consistent markets. We need farmers make decisions once a year. They can't be flip-flopping around on what to plant or who to sell to. We need consistency in the process.

The line about good neighbors is important in tricky times like these. Pete, it's good to talk to you. Thank you very much. Thank you. Pete Kaepleman is a fourth generation dairy farmer. He's in two rivers, Wisconsin. Ed Bristwa is presenting at the hearings on Kuzma today. he's vice president of international trade for the Consumer Technology Association represents more

than 1,200 U.S. and Canadian companies. Ed, good morning to you. Good morning, Matt. I don't want to predict the future, but today you are going to tell that hearing that U.S.MCA, in your words, is indispensable. Why do you use that word in particular? Well, I'm using that word because we don't exist in a vacuum here in North America. North America is part of a much broader world, and we compete together as Canada, United States and Mexico with China in particular. And the USMCA, the Kuzma, T-MEC, however you call it, is indispensable in that competition. How does it help the United States? It helps the United States by providing a stable set of trade rules amongst the three parties.

It integrates our markets. It should provide for duty-free treatment for goods trade across North America. And it allows for a seamless market for service provision and investment. So this, when we integrate our markets and we work together as a team, the North America market is the strongest market in the world. And I mean, it's a bit of what Pete was saying, the farmer, that he's looking for consistency in some ways. Tell me about the businesses that you represent. What are they looking for coming out of something like this? What does that consistency mean to them? Well, first of all, we want this agreement to continue. We want the three parties to agree to extend it for another 16 years. I'll be calling for that today in my testimony.

We also want to maintain the rules that work, and we want the agreement to be fully implemented. It's not helpful if there's constant uncertainty about whether this agreement is going to continue to exist or whether the parties want to renegotiate it. This is a review of the agreement to determine what are the benefits and what's working and what's not working, and then later, how to fix those problems. Do you think the president is listening to you? I think the president likes to use his bully pulpit to generate leverage. And when he makes threats about, well, we might have multiple agreements, one with Canada, one with Mexico, we've seen this movie before. He did this in the NAFTA 2.0 negotiations. These are leverage

plays. And we anticipate because of the strong, strong support across the Congress, across industry and the American people that this agreement will continue to exist as a tri-part agreement. But how do you understand the disconnect? To me, we just heard from a farmer who has issues and is looking for more access to a Canadian market, but says this deal needs to exist. You say that this deal needs to exist. There are many businesses that are saying this deal needs to exist. How do you understand the disconnect between that and what you're hearing from the president

about what he says is best for the country? I mean, I'm going to take this through the lens of negotiation. I was a former trade negotiator, and I think the president is trying to generate leverage to extract concessions in the review. He's got ongoing negotiations with Canada and Mexico. So as long as we view this through the rational lens of negotiation, we can see that there could be a tomorrow where this agreement continues to exist. I mean, I think the president really is trying to generate leverage.

Is this a rational time, do you believe? You know, it depends on your definition of rationality. It's been a wild year with lots of new tariffs, tariffs up, tariffs down, tariffs sideways. I think we are on a better path with more stability, but we need more certainty. We don't need more tariffs. We don't need more tariffs on Canada and Mexico are two closest trading partners. And thus far, it seems that there's a, what's continuing is this exemption for USMCA qualifying products. That has to continue, but we also need to exempt USMCA qualifying products for, from,

From the Section 232 tariffs, that's a different set of tariffs that concern national security, that would be a very big benefit to industry. Pete Kaep-Pulman talked about good neighbors and being good neighbors. This agreement is about trade, but it's also about that relationship. I mean, we are neighbors. Whether there are issues or not, it is what it is. So how much of this is about maintaining good relations between our two countries? Look, this period is one period in our history.

We've been a neighbor and friend of Canada for much of the history of the United States. I grew up across Lake Erie from Canada. I have lots of fond memories of that for my childhood, and we're always going to be neighbors and friends with Canada. And Mexico, we'll get through this time because if we don't work together, we become less secure and less stable as individual countries,

and we're stronger together, North America together. I have to let you go, but you don't believe that what has happened over the last six, eight months, has poisoned that well? I think it's been very difficult. I've been to Canada over, like, twice since the beginning of the year. And I think there are a lot of difficult feelings that have resulted from how things have transpired.

But I also detected that people are willing to let bygones be bygones and we'll forge a stronger relationship. And we think there's going to be a better tomorrow. Ed, good to talk to you. Thank you very much. Thank you, Matt. Ed Bristwa is the Vice President of International Trade for the Consumer Technology Association. He'll present at the Kuzma hearings today.

This ascent isn't for everyone. You need grit to climb this high this often. You've got to be an underdog that always over delivers. You've got to be 6,500 hospital staff, 1,000 doctors, all doing so much with so little. You've got to be Scarborough. Defined by our uphill battle and always striving to work. towards new heights. And you can help us keep climbing.

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Get insurance that's really big on care. Find an agent today at Dejardin.com slash business coverage. Laura Dawson is executive director of the Canada-U.S. Future Borders Coalition. She is a Canadian trade specialist living in the United States. Laura, good morning to you. Good morning. The hearings yesterday, you said that the USMCA is, in your words, the backbone of the North American trading system,

that it needs to be preserved, strengthened, but also it needs to evolve. Tell me more about the preservation and the strengthening, as well as trying to figure out how it is fit for purpose in 2025 and beyond. I mean, it's a 30-year-old agreement if we go back to the 1994 NAFTA, but it is still, as I said, the backbone of our commercial trade. It is all of the rules and regulations affecting anything that goes across the border or comes across the border. It's not just tariffs, but also standards and regulations. and most of Canada's GDP is dependent on trade, and 77% of Canada's exports go to the United States. So it really is the rules of the road for almost all commerce that Canada does. And we can certainly make it better because it should be an evolving agreement that is related to how our economy and how our technology changes as well.

How did that message go over? I think it went over pretty well. I like the fact that USTR is holding the. hearings. These are the rules and regs guys. These are the ones that are writing the legal text along with the Canadian and Mexican counterparts to really adjust things if they need to be adjusted. This is not a political process. There's a lot of politics going on to be sure, but this is the side of the process where good ideas can take root. And hopefully we gave them some good ideas yesterday. Can you really say that it's not a political process? Oh, the

political process take place at the executive level. So what's coming from the White House, what's coming from, oh, and also the legislature. But this process is just intended to feed in the how we're changing this rule, how we'll adopt that rule, whether or not this rule needs work. So that'll go into the big political hopper and be sliced and diced. Hopefully, though, some of these good ideas will make it out to the other side. I guess I ask that again, because the context matters here. You have relations between our two countries, which they're not frozen, but they're pretty chilly. The prime minister's down in D.C. today. He will ostensibly have a brief conversation with the president at the FIFA World Cup draw. People are hoping that something will come out of that because of the state of those relations. I just wonder how you can say that it's not a political process. No, the process as a whole is political, but the USTR hearings are the least political of that entire process. And so we know that this president is inclined to knock things over, break stuff.

He's remaking the rules of the global trading system. So while he's kicking stuff over, we want to make sure that there's some good ideas on the table when they start picking up the pieces. What are you hoping will come out of how brief this conversation may be between Mark Carney and Donald Trump today? Is there anything positive to get things back on track when it comes to trade discussions and tariff discussions between our two nations? There's some positive things. First of all, the relationship between Prime Minister Carney and President Trump is good. It's as good as it can be. They keep talking and there seems to be a cordiality between the two.

It doesn't always translate to continuing into talks on tariffs, but at least, at least those two are connecting in a way that President Trump did not connect with Prime Minister Trudeau. And I, you know, I am hopeful that they can carry that over. And really, the beacon of hope in all of this is that the USMCA products have largely been exempt from most tariffs. Yes, we're really concerned about steel and aluminum and lumber and other things, but most Canada-U.S. trade has remained exempt from these IEPA tariffs because, it qualifies as North American trade. That indicates to me that this president holds that North American agreement to be pretty important. And hopefully that priority continues as we move through the coming months. We call it Kuzma. The United States calls it USMCA, no matter what you call

it. Former Canadian diplomat Ben Roswell says that it's a dead man walking. He said the United States is looking, he told CBC, the United States is looking for signs of submission from Canada and that if this thing, the deal, the agreement were to die, it wouldn't be catastrophic for us. What would be is us diminishing our own sovereignty by giving the United States something that we can't afford to give away. What do you make of that? Wow, good for Ben. Is he right? It's also, I think that neglects the fact that it's also so important for United States trade.

The Canada is the largest investor in the United States. It is it or Mexico is the largest buyer from the United States. And so that message is landing with members of Congress. When I talk to members of Congress, even Republicans here in Washington, I hear, look, things are getting shaken up here. We understand the relationship with Canada as being challenged, but we still want to continue this economic relationship in some way, shape, or form. So please stick with us and please do what we can do. And, you know, what Canada can afford? I'm sorry, 170 to 80% of your exports are being sold to a single market.

You just can't walk away from that. Yes, you can transition. But it can't walk away. Even if it threatens, as he says, are sovereignty? Well, you know, sovereignty is a huge word. So what are we talking of? We're talking military sovereignty, security sovereignty. Are we talking, you know, economic?

You have to be more specific when you're parsing such significant significant words. But your point is that this thing is so important to both of our nations that we broadly, but those folks are sitting around those various tables, need to figure out a way to make it work. Yes, absolutely.

What kind of pressure do you think they're going to face in the next six, eight months? It really depends on how they frame this deal. We haven't done a review before. This is a brand new animal in the Kuzma, USMCA toolkit.

it. So whether they try to make it as routine as possible and not hit the heavy issues or whether they try to dive deep into heavier issues, that's an open question. But keep in mind that the U.S. can't change a lot of its tariff and economic rules without congressional approval. It didn't get congressional authority going into the review. So if there are substantive changes made, those have to be approved by Congress. So it may not be as consequential as some of us think. We'll be watching. Laura, thank you very much. You're very welcome.

Laura Dawson is Executive Director of the Canada-U.S. Future Borders Coalition, a Canadian trade specialist living in the United States. You've been listening to the current podcast. My name is Matt Galloway. Thanks for listening. I'll talk to you soon. For more CBC podcasts, go to cbc.ca slash podcasts.