Canada’s CUSMA Conundrum

Introduction Donald Trump’s egregious threat to impose 25 percent tariffs on all Canadian and Mexican imports shows the world that his administration has no intention of complying with U.S. treaty obligations. The threatened tariffs contravene U.S. obligations under the Canada-U.S.-Mexico Agreement (CUSMA) as well as the World Trade Organization (WTO) Agreement. It is a signal that shows Canada, Mexico and the world at large that his future government will not be bound by America’s treaty obligations, be they multilateral or bilateral. In other words, there are no rules that the U.S. can be expected to follow in ongoing trade relations. That approach was seen during Trump’s first administration, when tariff surcharges were applied on imports of steel, aluminum, solar panels and other items, which a subsequent WTO panel found had contravened U.S. treaty commitments. While some experts maintain that such tariff increases are beyond presidential powers and require congressional action, even if U.S. domestic laws that restrain their application, the threats themselves are hugely destabilizing.