WASHINGTON, D.C. – The United States has officially laid out a high-stakes list of demands that Canada must address to secure an extension of the Canada-United States-Mexico Agreement (CUSMA). The move signals a period of intense trade friction as both nations prepare for the mandatory six-year review of the pact in 2026.
U.S. Trade Representative (USTR) officials and industry leaders have identified several “irritants” that they claim undermine the spirit of the free trade agreement. According to the report, the U.S. is prioritizing several key areas where it believes Canada is falling short of its obligations:
- Digital Services Tax (DST): The U.S. has reiterated its fierce opposition to Canada’s implementation of a 3% tax on large tech companies (mostly American). Washington views this as discriminatory and has threatened retaliatory tariffs if Ottawa does not back down.
- Dairy Access: A long-standing point of contention, the U.S. demands that Canada dismantle “exclusionary” practices within its supply management system. Despite previous trade tribunal rulings, the U.S. argues Canada is still blocking American dairy farmers from their fair share of the market.
- Supply Chain & Border Security: Citing “national security” concerns, the U.S. is pushing for more stringent alignment on border protocols and defense spending, mirroring recent rhetoric regarding Canada’s 2% NATO commitment.
- Softwood Lumber: While not explicitly part of CUSMA, the U.S. is using the treaty review as leverage to push for a new deal on softwood lumber, an industry plagued by decades of litigation and duties.
The 2026 “Cliff”
CUSMA contains a “joint review” clause. If all three countries do not confirm in writing by 2026 that they wish to extend the agreement, it will trigger a process that could see the treaty expire 10 years later.
By releasing these demands now, the U.S. is effectively putting the Canadian government on notice: status quo is not an option.
Canada’s Response
Federal officials in Ottawa have maintained that Canada is in full compliance with the deal. Trade Minister Mary Ng has previously defended the Digital Services Tax as a matter of “tax fairness” and has vowed to protect the supply management system for dairy farmers.
However, analysts suggest that Canada may have little room to maneuver. With the U.S. being Canada’s largest trading partner, any lapse or disruption to CUSMA would be catastrophic for the Canadian economy, particularly the automotive and manufacturing sectors in Ontario and Quebec.
