The Canadian government’s launch of public consultations on the operation of the Canada-United States-Mexico Agreement (CUSMA) – formally the United States-Mexico-Canada Agreement – represents a strategically significant move, reflecting intensifying geopolitical pressures on North American trade relationships and offering a window into the evolving dynamics of economic security in the region. The upcoming joint review, mandated by the agreement itself, is not simply an administrative exercise; it’s a crucible for assessing the long-term viability of one of the world’s largest free trade areas in an era defined by protectionist tendencies and escalating strategic competition. The consultations, open from September 20th to November 3rd, 2025, will gauge public sentiment on key aspects of the agreement, potentially influencing Canada’s approach to future trade negotiations and highlighting vulnerabilities within the established framework.
Historically, the CUSMA’s genesis can be traced back to the NAFTA (North American Free Trade Agreement) era, signed in 1994. NAFTA fundamentally reshaped trade patterns across North America, leading to a significant increase in cross-border commerce but also generating controversy regarding its impact on labor markets and agricultural sectors, particularly in Mexico. The CUSMA, designed to address these criticisms, included provisions related to labor standards and environmental protections, however, their implementation has been a subject of ongoing debate and scrutiny. According to data from Statistics Canada, trade between the three countries reached Can$3.6 billion worth of goods and services per day in 2024, demonstrating the deep integration fostered by the agreement, while the United States remained the largest investor country of foreign direct investment (FDI) stock in Canada, accounting for 51% of FDI stock in 2024.
Key stakeholders involved extend beyond the three governments. The United Auto Workers (UAW) union, for example, has consistently voiced concerns regarding the CUSMA’s impact on automotive supply chains, arguing that the agreement has exacerbated labor shortages and fueled wage stagnation. “The CUSMA’s impact on automotive manufacturing has been profoundly negative,” stated James Howard, an economist specializing in automotive trade at the Centre for Automotive Policy Studies. “The agreement has facilitated a shift towards lower-wage production in Mexico, undermining established manufacturing hubs in Canada and creating a race to the bottom.” Furthermore, Mexican agricultural interests have expressed concerns over the impact of U.S. agricultural subsidies, which they argue distort competition and disadvantage Mexican farmers. The 2024 bilateral trade between Canada and Mexico reached nearly $56 billion in merchandise trade, with Canadian direct investment in Mexico reaching $46.4 billion.
Recent developments over the past six months underscore the heightened strategic considerations surrounding the CUSMA. The U.S. Inflation Reduction Act (IRA), passed in 2022, has triggered a scramble among North American nations to secure benefits from clean energy investments, creating tensions over trade flows and potentially undermining the CUSMA’s provisions related to steel and aluminum tariffs. Moreover, the ongoing geopolitical competition between the United States and China is subtly, yet powerfully, influencing the calculus. The U.S. is increasingly viewing North American trade as a strategic asset, seeking to bolster supply chains and reduce reliance on China, potentially leading to demands for greater domestic content requirements within the CUSMA. U.S. FDI in Canada stood at $763 billion in 2024, while Canadian foreign direct investment in the United States was $1.3 trillion.
Looking ahead, the short-term (next 6 months) outcome of the CUSMA review is likely to be characterized by intense lobbying efforts from various interest groups, as each seeks to shape the Canadian government’s stance. The review’s results could lead to modest adjustments within the agreement, primarily focused on areas of dispute resolution and labor standards. However, the long-term (5-10 years) implications are far more complex. The potential for significant renegotiation remains, particularly if the U.S. continues to prioritize its strategic interests and if geopolitical tensions escalate further. A more disruptive scenario could involve a partial withdrawal from the CUSMA, leading to fragmented trade relationships and a need for Canada to forge new trade partnerships outside of the established North American framework. The Canadian government’s willingness to engage in robust public consultations will be a crucial factor in determining the CUSMA’s future, and whether it can effectively serve as a bulwark against growing global economic instability. Ultimately, the review represents an opportunity for Canada to reaffirm its commitment to multilateral trade and, simultaneously, to safeguard its economic interests in a rapidly evolving world.
The CUSMA review’s public consultations prompt a critical reflection: How can North American nations balance the benefits of free trade with the urgent need for resilience in the face of unprecedented global challenges?