The looming tariffs against Canadian and Mexican exports to the United States are not just another round of trade skirmishes. They may well signify the beginning of the end for Bretton Woods-era multilateralism, the rules-based global trade order that has underpinned international commerce since 1944. Now that Donald Trump is back in the White House, his administration is doubling down on policies that favour economic nationalism, marking a definitive departure from global trade as we know it.
For Canada, this shift is seismic. American tariffs on Canadian and Mexican products, including agri-food exports, could dismantle what remains of the Comprehensive US-Mexico-Canada Agreement (CUSMA). Trump sees trade as a zero-sum game, where the U.S. has been taken advantage of for decades. The imposition of tariffs is not about fixing a broken system; it’s about reshaping the global trade order to bolster American industries, gain negotiation leverage, and appeal to his political base. Even if Canada retaliates with 500% tariffs, it would be irrelevant to Trump’s calculus. The objective is power exercising it, consolidating it, and using it to rewrite trade relationships on U.S. terms.
The End of Multilateralism?
Since the signing of CUSMA in 2020, Canada has operated under the assumption that trade relations with the U.S. would remain relatively stable. But with tariffs now being used as a key policy tool, expect a shift toward bilateral agreements where the U.S. dictates terms to individual nations rather than negotiating in multilateral forums. In such a scenario, Canada’s bargaining power weakens significantly. The U.S. market is the backbone of Canada’s agricultural exports, with nearly 60% of total agri-food exports destined for American consumers. A tariff war would force Canadian producers to absorb higher costs, pass them on to consumers, or search for alternative markets—none of which are ideal outcomes.
For Canadian farmers and food processors, the impact is immediate and brutal. Higher tariffs on products like beef, pork, produce and grains erode competitiveness in the U.S. market, shrinking margins for producers already grappling with inflation, labour shortages, and supply chain disruptions. The agri-food sector, which has thrived under integrated North American supply chains, must now recalibrate.
Alternative markets in Europe and Asia offer some opportunities, but they come with logistical challenges and regulatory hurdles that make them far less attractive than the U.S. The notion that Canada could simply pivot away from the American market is a fantasy; the economic and geographic realities dictate otherwise. Meanwhile, Mexico, facing similar tariffs, could turn to other partners like China, deepening the divide between North America’s economies.
The most concerning aspect of this shift is how ill-prepared Canadian policymakers appear to be. There is little indication that Ottawa fully grasps the scale of the transformation underway. Instead of scrambling to counteract tariffs with proactive trade diplomacy, we see Canadian leaders clinging to a multilateralism that Trump’s policies are designed to dismantle. Retaliatory tariffs, though politically necessary, are a blunt instrument that won’t deter Washington from its broader objective: reshaping trade to serve U.S. interests first and foremost.
The Future of CUSMA
With tariffs becoming the norm rather than the exception, CUSMA itself could become obsolete. Trump has long viewed NAFTA (and by extension, CUSMA) as a bad deal for the U.S. His administration is likely to seek to replace it with one-on-one agreements, where the U.S. can leverage its economic might to extract concessions from Canada and Mexico individually. The days of structured dispute resolution and trade predictability may be numbered.
Addressing Interprovincial Trade Barriers
Canada cannot afford to ignore the deep inefficiencies within its own borders. Interprovincial trade barriers remain a self-inflicted wound that weakens the country’s economic resilience. While Ottawa scrambles to respond to U.S. tariffs, businesses still struggle to move goods freely between provinces due to archaic regulations. If Canada hopes to offset the damage of external trade shocks, it must first dismantle these internal obstacles. A unified, efficient domestic market is the best foundation for strengthening international trade partnerships.
The agri-food sector must prepare for a future where trade uncertainty is the status quo. Canadian producers will need to invest in diversification strategies, expanding into non-traditional markets, even if doing so is costly. Domestic policymakers, meanwhile, must shift their mindset from damage control to proactive trade positioning. Simply reacting to U.S. tariffs won’t be enough; Canada must build stronger alliances beyond North America and push for new trade agreements that mitigate reliance on the U.S.
Trump’s tariffs are not just a policy shift; they are a fundamental restructuring of global trade dynamics. If Canada fails to adapt, our agri-food industry—and the broader economy—will bear the consequences.
