With the G7 Behind Us, CUSMA Review Prep Moves into Focus

June 18, 2025 – Against the backdrop of this week’s G7 summit, Canada must avoid overreacting to escalating US trade actions and approach the upcoming Canada-United States-Mexico Agreement (CUSMA) review with discipline and strategic calm, according to a new Verbatim from the C.D. Howe Institute.

In “Urgency and Caution: Charting a Careful Path to the CUSMA Review,” Meredith Lilly argues that Canada should avoid knee-jerk responses to US provocations and focus instead on long-term economic and diplomatic priorities. Her message: show restraint, work closely with Mexico, and let seasoned trade officials guide the process.

“Prime Minister Mark Carney’s approach so far might frustrate the ‘elbows up’ crowd eager for a fight, but it is the duty of every Canadian prime minister to find a way to work constructively and productively with whoever occupies the White House,” says Lilly.

Lilly points out that the six-year CUSMA review isn’t a full-blown renegotiation – unless the White House gets special authority from Congress, which seems unlikely. That gives Canada and Mexico room to focus on practical updates, not sweeping changes.

The report says Canada should expect US pressure on several files: the digital services tax, dairy quotas, stricter auto rules, and Quebec’s new labelling laws. At the same time, Canada should push back on long-standing grievances like softwood lumber duties and tariffs already ruled illegal by international bodies.

Lilly also addresses growing US interest in curbing Chinese investment in strategic sectors like AI, semiconductors, and advanced manufacturing, but only if such cooperation comes with reciprocal trade concessions. “If Washington wants to build ‘Fortress North America,’ they can’t keep slapping Canada with national security tariffs,” she says.

Timing will matter. Canada should move quickly enough to stay at the table – but not so fast that it accepts a bad deal. Working in lockstep with Mexico will be critical.

“CUSMA remains essential, but it’s not a cure-all,” says Lilly. “Canada must stay nimble, consult widely, and use the review process to reinforce – not undermine – its long-term economic security.”

Read the Full Report

For more information, contact: Meredith Lilly, Professor and Simon Reisman Chair in International Economic Policy, Carleton University; Percy Sherwood, Associate Editor and Communications Officer, C.D. Howe Institute, 416-407-4798, psherwood@cdhowe.org.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

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