How does Canada's position on North American trade affect the economy?

Canada's position in North American trade gives the country preferential access to a market of 510 million people and a combined economy of over $30 trillion. The Canada-United States-Mexico Agreement (CUSMA), in effect since July 1, 2020, secures duty-free trade for almost all Canadian goods, locks in rules of origin that protect Canadian content in supply chains, and includes modern provisions for digital trade, intellectual property, and labour and environmental protection.

Two-thirds of Canadian goods exports go to the United States and another 4 to 5 per cent to Mexico, making CUSMA the foundation of Canadian trade policy. The auto industry depends on the agreement: more than 80 per cent of Canadian auto exports go to the United States under CUSMA's rules of origin requiring 75 per cent North American content. Energy exports flow south through pipelines and electrical interties from Atlantic Canada to British Columbia. Canadian beef, pork, lumber, aluminum, and aerospace products also depend on preferential access.

The trade relationship is supported by physical infrastructure including the Ambassador Bridge, the Detroit-Windsor Tunnel, the Blue Water Bridge, the Peace Bridge, the Champlain Bridge in Hemmingford, the Pacific Highway Crossing in Surrey, and dozens of smaller crossings. The Gordie Howe International Bridge between Windsor and Detroit, scheduled to open in 2025, will be the longest cable-stayed bridge in North America. Border-region cities like Windsor, Sault Ste. Marie, and Buffalo-Niagara depend on the smooth flow of CUSMA trade.

The agreement faces a six-year sunset review in 2026. Canadian negotiators are preparing for U.S. demands on dairy supply management, digital services tax, online streaming rules under the Online Streaming Act, and possible carbon border adjustments. Buy America provisions in U.S. infrastructure spending, softwood lumber duties (currently in their fifth round of disputes), and steel and aluminum tariffs are all active issues. Federal trade officials led by the Department of Foreign Affairs, Trade and Development manage the relationship through the Canada-U.S. Joint Committee.