CBJ JULY 2026

11 TRADING ON UNCERTAINTY: TRUMP’S CUSMA GAMBLE & CANADA’S ECONOMIC FUTURE JULY 2026 « The Canadian Business Journal 10 D onald Trump’s decision not to support the automatic renewal of CUSMA is not the end of North American free trade—but it may mark the end of Canada’s long-held assumption that privileged access to the world’s largest market is guaranteed. FOR MORE THAN three decades, Canada’s economic strategy has rested on one foundational assumption: the United States would remain its reliable trading partner. That assumption survived recessions, political upheavals, financial crises and even the renegotiation of the North American Free Trade Agreement (NAFTA) into the Canada– United States–Mexico Agreement (CUSMA) in 2020. While the agreement was never perfect, it provided what businesses value most—certainty. Now that certainty has been shaken. President Donald Trump’s announcement that the United States will not support the automatic renewal of CUSMA during its first six- year review has sent a clear signal to investors, manufacturers and policymakers across North America. While the agreement itself remains in force, the decision transforms what was intended to be a routine review into the opening chapter of another high-stakes trade negotiation. For Canada, this is far more than a diplomatic dispute. It is an economic stress test. The Difference Between “Not Renewing” and Ending the Deal Much of the public discussion has focused on whether CUSMA is ending. It is not. The agreement continues to govern trade between Canada, the United States and Mexico. Tariff preferences remain in place, supply chains continue to operate, and businesses can still rely on the existing rules. Because the three parties did not agree to extend the agreement for another sixteen years during its scheduled review, CUSMA now moves into an annual review process instead of receiving the automatic extension envisioned when it was negotiated. That distinction matters. Markets dislike uncertainty more than they dislike bad news. Investors can adapt to higher tariffs or stricter regulations if they know the rules will remain stable. What is far more difficult is investing billions of dollars in factories, mines or logistics infrastructure when the rules themselves may change every year. That uncertainty is already influencing boardroom decisions. Canada’s Export Engine Faces a New Reality Few developed economies are as dependent on a single export market as Canada. Roughly three-quarters of Canadian merchandise exports are destined for the United States. Entire industries—including automotive manufacturing, forestry, aluminum, aerospace, agriculture and energy—have evolved around seamless cross-border commerce. Ontario auto plants depend on parts crossing the border multiple times before a vehicle reaches consumers. Alberta’s energy sector relies on pipelines and American refineries. Quebec’s aluminum industry supplies manufacturers throughout the U.S. industrial heartland. The integrated nature of North American production means disrupting trade is costly for both countries. Yet the possibility of future tariffs or revised rules creates an incentive for companies to delay investment until they understand where negotiations are headed. For Canada’s economy, hesitation itself becomes a cost. Investment Thrives on Predictability Capital has choices. Global corporations deciding where to build their next battery plant, semiconductor facility