CBJ JULY 2026

13 TRADING ON UNCERTAINTY: TRUMP’S CUSMA GAMBLE & CANADA’S ECONOMIC FUTURE JULY 2026 « The Canadian Business Journal 12 or advanced manufacturing operation evaluate dozens of variables: labour costs, taxation, infrastructure, political stability and market access. Canada has traditionally scored highly because CUSMA effectively gave companies preferential access to a consumer market of nearly 500 million people. If that access becomes less predictable, Canada’s competitive advantage narrows. The result may not be an immediate exodus of investment. Instead, companies may simply postpone major decisions while waiting to see whether negotiations stabilize or deteriorate. Those delayed investments eventually translate into fewer construction projects, slower job creation and weaker economic growth. In modern economies, policy uncertainty often functions like a hidden tax on investment. Trump’s Negotiating Strategy Is Familiar For Canadian officials, there is an element of déjà vu. During his first administration, Donald Trump repeatedly described NAFTA as “the worst trade deal ever made,” ultimately forcing Canada and Mexico back to the negotiating table. Many observers initially feared the agreement would collapse entirely. Instead, negotiations produced CUSMA. That history suggests Trump’s latest announcement should not automatically be interpreted as an intention to abandon North American trade altogether. Rather, it reflects a negotiating strategy that uses uncertainty as leverage. By refusing to grant an automatic extension, Washington increases pressure on both Canada and Mexico to negotiate from a position of uncertainty. Whether that strategy succeeds politically remains to be seen, but economically it shifts leverage toward the United States simply because of the asymmetry between the two economies. The United States sells globally. Canada sells primarily to America. Canada’s Diversification Challenge Every trade dispute revives an old Canadian ambition: diversify exports. Successive governments have promised to reduce dependence on the United States by expanding trade with Europe and Asia. Progress has been real but limited. Trade agreements with Europe and countries across the Pacific have created opportunities, yet geography continues to favour the United States. A truck leaving Toronto can deliver goods to Chicago in less than a day. No trade agreement can eliminate the geographic advantages of the American market. Similarly, Canadian energy infrastructure remains oriented southward. Even when global demand exists, transportation capacity often limits Canada’s ability to redirect exports elsewhere. Diversification is economically sensible—but it is a decades-long project, not a short-term solution. THE GORDIE HOWE INTERNATIONAL BRIDGE SET TO OPEN IN JULY 2026