CBJ JULY 2026

17 TRADING ON UNCERTAINTY: TRUMP’S CUSMA GAMBLE & CANADA’S ECONOMIC FUTURE JULY 2026 « The Canadian Business Journal 16 increased volatility, particularly among companies with significant exposure to cross- border manufacturing. Financial markets are not pricing in the collapse of CUSMA. They are pricing in uncertainty. There is an important difference. A Wake-Up Call for Productivity The larger question may not be whether Canada can preserve CUSMA. It is whether Canada has become overly reliant on preferential access to the American market instead of improving its own competitiveness. For years, economists have warned about Canada’s sluggish productivity growth. Business investment has lagged. Interprovincial trade barriers remain. Major infrastructure projects often require years of regulatory approvals. Innovation spending trails many peer economies. If access to the American market becomes incrementally less certain, Canada may finally confront structural weaknesses that existed long before Trump’s latest announcement. Trade agreements cannot compensate indefinitely for domestic inefficiencies. What Businesses Should Watch Next Over the coming year, executives will focus less on political rhetoric than on negotiation details. Key questions include whether existing automotive rules remain intact, whether tariff exemptions continue, whether dispute resolution mechanisms survive and whether annual reviews evolve into constructive negotiations or recurring political battles. Most economists expect difficult discussions rather than immediate disruption. That distinction offers some reassurance. Supply chains built over thirty years cannot simply be dismantled overnight. Nor is it necessarily in the economic interest of the United States to significantly weaken highly integrated industries that support American employment. Still, businesses dislike operating under the constant possibility of policy shifts. Planning five years ahead becomes far more complicated when trade rules are effectively reviewed every year. Canada’s Next Economic Chapter Perhaps the most significant consequence of Trump’s announcement is psychological. For decades, Canadian businesses viewed privileged access to the American market as almost permanent. Today, that permanence appears conditional. That realization may ultimately accelerate long-overdue conversations about productivity, economic diversification, infrastructure, domestic investment and innovation. In that sense, Trump’s decision is less about tariffs than about strategy. Canada now faces a choice. It can continue assuming that its economic future will always be anchored to an increasingly unpredictable neighbour. Or it can treat this moment as the catalyst for building a more resilient, more competitive economy capable of thriving regardless of who occupies the White House. CUSMA remains in force, and North American trade is unlikely to unravel overnight. What may be ending instead is the certainty that underpinned Canada’s economic strategy for more than thirty years. The agreement survives— but the assumption that it will always provide stable, predictable access to the U.S. market no longer looks quite so certain.