If Trump’s trade target is a customs union, Canada will have a big decision to make

7 comments

1. The Canadian government failed to reach a trade deal with the United States before the August 1 deadline, resulting in increased tariffs, but the CUSMA exemption remains in place. The upcoming CUSMA renegotiation in Summer 2026 could transform the trade relationship, with the Trump administration potentially seeking to create a “Fortress North America” customs union. Such a customs union would require Canada to match U.S. tariffs on all countries, effectively eliminating Canada’s ability to negotiate independent trade deals and potentially invalidating existing agreements with other nations. If Canada accepts this arrangement, it would guarantee U.S. market access but lose trade independence; if rejected, Canada would maintain trade flexibility but face potentially severe U.S. tariffs. The decision represents a critical choice between “short-term gains for long-term pain” or “short-term pain for long-term gains,” with significant economic implications and likely divergent opinions across provinces and industries.

2. See I don’t think Canada is going to draw CLOSER to an administration that has openly questioned their sovereignty.

3. Short term pain. But many Canadians aren’t going to accept that.

   The propaganda for us to bend the knee and kids the ring will be intense.

4. If I were Canada I’d really try to avoid becoming more dependent on a schizophrenic and hostile nation. Facing tariffs would suck but surely they can come up with an alternative before the agreement expires in 2036. At least enough alternatives to soften the blow.

5. “A customs union would mean further integration with the U.S., guaranteeing access to its market, but it would come at the expense of lost independence.”

   With the way Canadians are feeling about the US these days, if Carney chose to give away more of our independence to the US, there would be an absolute revolt.

   Canadians want a pivot away from the US and understand there may be some pain in that transition.

6. Not much of a decision, there’s no way Canada will enter a customs union with the US now. Not after the annexation rhetoric and perceived betrayal on trade. Carney wouldn’t go for it, not just because it’s obviously a terrible idea but also because he would be voted out almost instantly if he genuinely tried to push for it.

7. >The Trump administration has referred in the past to the idea of creating a “Fortress North America” as a means of counteracting the threat from China.

   >As such, a major trade irritant for the U.S. has been third countries’ use of Canada and Mexico to circumvent tariffs, with China, for example, making significant investments …

   The US-China friction is not just about Trump. I don’t see how Canada can realistically stay out of a US-China trade dispute. Geography dictates that Canada would have a very difficult time aligning with anyone against US interests.

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