North American trade deal faces new test under Trump’s watch

President Donald Trump on Tuesday expressed openness to renegotiating the United States-Mexico-Canada Agreement (USMCA) or pursuing “different deals,” signaling uncertainty over the future of North America’s flagship trade pact. His comments came during a meeting with Canadian Prime Minister Mark Carney at the White House ahead of the agreement’s scheduled review next year.

The USMCA, enacted during Trump’s first term, allows most goods from Canada and Mexico to enter the U.S. tariff-free. However, since returning to office, Trump has sought to reshape the agreement, emphasizing that he wants arrangements that serve what he calls “America’s best interests.”

“We could renegotiate it, and that would be good, or we can just do different deals,” Trump said. “We’re allowed to do different deals if we want. We might make deals that are better for the individual countries.”

His remarks reflected an ambivalent stance that could leave businesses and policymakers uncertain about the trade framework linking the continent’s three largest economies.

Carney, on his second visit to Washington as prime minister, aimed to ease tensions and address sector-specific tariffs that have strained relations between Ottawa and Washington. Canada depends heavily on trade with the U.S., which accounts for over three-quarters of its exports.

Although Trump expressed personal warmth toward Carney in contrast to his tense relationship with former prime minister Justin Trudeau he described a “natural conflict” between the two nations. “We want Canada to do great,” he said, “but there’s a point at which we also want the same business.”

Carney gently countered Trump’s phrasing. “There are areas where we compete, and it’s in those areas where we have to come to agreements that work,” he said. “But there are more areas where we are stronger together, and that’s what we’re focused on.”

Relations between the two allies have soured amid U.S. tariffs on Canadian steel and aluminum known as Section 232 tariffs that impose duties as high as 50 percent. Trump also jokingly suggested a “merger” between the two countries, a remark that deepened Canadian unease over Washington’s approach.

“This is the lowest point in relations that I can recall,” said Frank McKenna, former Canadian ambassador to the U.S. “There’s an outright rebellion: ordinary citizens are changing vacation plans, and companies are moving business trips away.”

Carney has defended the USMCA as crucial to Canada’s economy, noting that more than 85 percent of bilateral trade remains tariff-free. He said U.S. tariffs on Canadian goods average 5.6 percent, the lowest among America’s trading partners.

Experts say Carney’s goal was to improve relations and seek relief on tariffs ahead of next year’s review. “Opposition parties and the public will criticize Carney if he doesn’t make progress on the tariff front,” said Daniel Béland, political scientist at McGill University.

Despite the tensions, U.S.-Canada economic ties remain extensive. Around USD 2.5 billion worth of goods and services cross their border daily. Canada is the top export destination for 36 U.S. states and supplies over 60 percent of U.S. crude oil imports and 85 percent of its electricity imports.

“The bigger prize would be a mutual agreement to negotiate quickly the future of free trade,” McKenna said. “But if the U.S. were to issue a six-month termination notice, it would send a deep chill across North America.”