If you thought the trade drama between Ottawa and Washington died down after the first Trump administration, 2025 probably gave you a massive reality check. It started with a tweet—well, a Truth Social post—and ended with a chaotic shuffle of tariffs, late-night phone calls, and a literal change in Canadian leadership.
Basically, the canada deal with trump isn't a single piece of paper. It’s a messy, ongoing hostage negotiation over the CUSMA (USMCA) trade pact.
The spark that lit the fire happened right after Trump’s second inauguration. He didn't waste time. On February 1, 2025, Trump signed executive orders to slap a 25% tariff on almost everything coming from Canada and Mexico. His reason? Fentanyl and illegal border crossings. Canada was blindsided. While most of the "border crisis" talk usually targets the southern border, Trump lumped the Great White North right into the same bucket.
The $1.3 Billion Handshake
Justin Trudeau tried the "charm offensive" again, but it didn't land the same way it did in 2018. To try and stave off the 25% tax, Canada scrambled to announce a $1.3 billion border security plan in early 2025. They promised "24/7 eyes on the border," new helicopters, and even a "Fentanyl Czar" to appease the White House.
It worked. For about thirty days.
Trump paused the tariffs until March 4, 2025, to "assess" if Canada was actually doing anything. This was the first version of the canada deal with trump in this new era—a temporary truce bought with a billion-dollar promise of more police and better tech.
But things went south fast. On March 4, those 25% tariffs actually kicked in because Trump decided the progress wasn't fast enough. Canada hit back immediately with $30 billion in retaliatory tariffs on American goods. If you were looking for US-made bourbon or orange juice in Ontario last spring, you probably noticed the shelves were looking pretty thin—or the prices were eye-watering.
Mark Carney and the "Reliance to Resilience" Shift
One of the wildest parts of this story is that the trade war actually helped push Justin Trudeau toward the exit. By March 2025, Trudeau announced his intention to step down, and Mark Carney eventually took the reins.
Carney didn't just try to be "Trudeau 2.0." He pivoted. He realized that depending on the U.S. for 75% of exports was becoming a national security risk. He started talking about "resilience" instead of "reliance." While Canada kept negotiating with Trump, they also started looking toward Beijing and India to diversify.
Honestly, it was a bold move. Most experts, like those at Chatham House, noted that while trade with the U.S. is vital, the "Donroe Doctrine" (a play on Trump’s Monroe Doctrine interpretation) made the U.S. an unpredictable partner.
Why the Tariffs Kept Jumping
Just when things seemed to stabilize in the summer of 2025, Trump turned up the heat. He argued that Canada was still a "transit point" for illicit drugs. In August 2025, he bumped the tariff on certain Canadian goods from 25% to 35%.
The White House released a fact sheet claiming the amount of fentanyl seized at the northern border could "kill 16 million Americans." Canada disputed the numbers, but when you're dealing with the U.S. President, the math doesn't always matter as much as the leverage.
The Current State of the USMCA (CUSMA)
So, where does the canada deal with trump stand today, in early 2026?
It’s currently in a state of "strategic competition."
- The 85% Rule: Right now, about 85% of Canada-U.S. trade is technically tariff-free because Trump eventually exempted "CUSMA-compliant" goods.
- The "Irrelevant" Pact: Trump recently called the trade agreement "irrelevant" during a Ford plant tour in Michigan. He’s signaled he might let the whole deal expire during the 2026 review.
- The Steel and Auto War: While orange juice and appliances are mostly back to normal, the U.S. still maintains heavy tariffs on Canadian steel, aluminum, and automobiles. Canada is keeping its own "counter-tariffs" on U.S. autos in response.
It's a stalemate.
What This Means for Your Wallet
If you're buying a car or building a house, you're feeling this. Steel and aluminum are the backbone of construction and manufacturing. When those get taxed at 25%, the cost doesn't just disappear; it gets tacked onto the price of your new SUV or the renovation of your kitchen.
J.P. Morgan research suggests these tariffs could cost the average U.S. household upwards of $1,500 by the end of 2026 if a permanent deal isn't reached. For Canadians, the cost is even higher due to the smaller market size and the retaliatory taxes on imported tech and consumer goods.
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How to Protect Yourself from Trade Volatility
You can't sit in on the CUSMA review meetings, but you can navigate the fallout.
- Source Locally: If you’re a business owner, look at domestic suppliers for raw materials. The "Made in Canada" or "Made in America" labels aren't just about patriotism anymore; they're about avoiding the 25% "Trump tax."
- Audit Your Supply Chain: If your products cross the border more than once during manufacturing (which is common in the auto industry), you’re getting hit twice. Simplifying the route can save thousands.
- Watch the 2026 Review: This is the big one. The CUSMA agreement has a mandatory "joint review" this year. If the three countries can't agree to extend it, the whole thing could vanish by 2036, which sounds far away until you realize businesses plan ten years in advance.
The "deal" isn't finished. It’s a moving target. Mark Carney is currently in Beijing trying to find new buyers for Canadian canola and energy, just in case the relationship with the U.S. continues to fray.
Keep an eye on the auto sector. That’s the canary in the coal mine. If Trump stays firm on auto tariffs, the "deal" is effectively dead, regardless of what the paperwork says.
To stay ahead, focus on diversifying your own procurement. Don't wait for a final handshake that might never come. Monitor the official Global Affairs Canada updates and the U.S. Trade Representative (USTR) notices monthly, as the list of "exempt" products changes with almost no warning.