Prime Minister Mark Carney travelled to Washington D.C. soon after his election win and didn’t take the “elbows up” approach that he continuously advocated for during the campaign.
According to Professor Meredith Lilly of Carleton University, who wrote a recent report for the C.D. Howe Institute, Carney took the right approach.
“It is the duty of every Canadian prime minister to find a way to work constructively and productively with whoever occupies the White House, even President Trump,” writes Lilly.
“Canada’s economy and security depend on it, and the risk of negative outcomes to either country from a poor relationship between leaders rests overwhelmingly with Canada.”
Given that Lilly thinks Carney took the right approach during his first meeting with Trump, its fair to ask what might come next.
Spoiler alert: Canada-Mexico relations will be crucial.
Lilly feels that there are general signs that the trade chaos south of the border might be easing a little bit. Most goods traded between Canada and the United States are eligible for tariff-free treatment, so long as they comply with the Canada-US-Mexico Agreement (CUSMA). However, many sectors, like steel, aluminum, and autos, are still facing significant tariffs.
What Canadians should be looking forward to, however, is the six-year review of the CUSMA, which will happen next year. While some might argue that Trump’s erratic behaviour and willingness at times to ignore the CUSMA is evidence that Canada shouldn’t be so fast to get to the negotiation table, it is important to point out that most goods heading into the U.S. today are exempt from tariffs because of that very agreement. And coordination with Mexico once Carney does decide to head to the negotiating table will be key.
Lilly doesn’t think there will be a full renegotiation of the CUSMA in 2026, largely because it would require Trade Promotion Authority from Congress ahead of the U.S. midterm elections. That means a negotiation about changes to CUSMA would be limited, which could work to Canada’s advantage.
Still, the U.S. will want to challenge things like Canada’s Digital Services Tax and Online Streaming Act. Canada in turn will want to challenge the U.S. on things like softwood lumber duties and U.S. agricultural protections. That means that while the whole CUSMA may not be up for renegotiation, significant issues will be dealt with at the negotiation table next year.
If Trump wants to start negotiating changes to the CUSMA early, Lilly suggests Canada wait and see exactly what the U.S. administration’s attitude is. If the Trump administration wants to make radical changes that favour the U.S. without concessions on the other side, Lilly suggests Canada pursue a slower timeline to allow cooler heads to prevail.
A key in all of this will be for Carney to maintain a strong working relationship with Mexico, as the two smaller countries should ensure that they cooperate to take on their much larger trading partner. By bringing Mexican President Claudia Sheinbaum to the G7, Lilly thinks Carney is sending a signal about the importance of strong cooperation between Canada and Mexico, although there will also be areas where the two countries disagree.
The strongest warning Lilly has in her C.D. Howe piece is to ensure any negotiations surrounding changes to the CUSMA don’t devolve into two bilateral deals with the United States, as any move in that direction would leave both Canada and Mexico without an ally in negotiating with a much bigger and more economically powerful neighbour in the United States, with Trump at the head of the negotiating table no less.
The next year in Canada-US-Mexico relations will be interesting to say the least, with so much having happened in just the six month of 2025. It may feel like an eternity until 2026, but no doubt leaders in all three countries are already looking forward toward negotiations involving key changes to the CUSMA.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
