Tariffs Threaten US Trade with Neighboring Nations

Key Takeaways

• The US Trade Representative (USTR) is holding a public consultation to determine the future of the Canada-US-Mexico Agreement (CUSMA)
• US agriculture, business, and policy groups are urging the Trump administration to renew the agreement, citing its benefits for their industries
• The agreement is set to expire in 2026, and the USTR must report its recommendation to Congress by January 2
• Witnesses at the hearing emphasized the importance of preserving tariff-free trade with Canada and Mexico
• Some sectors raised technical issues with the agreement’s implementation, including concerns about Mexico’s enforcement of labor standards and Canada’s protection of its dairy sector

Introduction to the Hearing
A crucial hearing in Washington into the future of Canada’s three-way trade deal with the US and Mexico kicked off with US agriculture, business, and policy groups urging the Trump administration not to scrap the agreement. The hearing, held by the Office of the US Trade Representative (USTR), is the centerpiece of the government’s public consultation about whether to renew the Canada-US-Mexico Agreement (CUSMA) in 2026, renegotiate it, or withdraw. Speaker after speaker called for an extension of the agreement, emphasizing how its free trade terms have allowed their sector to boost revenues through access to both the Canadian and Mexican markets.

Testimony from US Agricultural Producers
Dave Walton, secretary of the American Soybean Association, spoke out against Trump’s move to hit Canadian and Mexican exports with tariffs, including those targeting specific industrial products such as steel, aluminum, and automotive parts. The tariffs "increase the likelihood that US soybean farmers will end up in the crosshairs of potential retaliation," Walton said. Riley Bushue, vice-president of the Northwest Horticultural Council, representing the biggest US apple, pear, and cherry growers, a $13 billion US industry, said retaliatory tariffs imposed by Mexico during Trump’s first-term trade war damaged his industry’s exports. "With thousands of American family tree-fruit farms already at risk of going out of business, losing preferential access to Mexico and Canada would be devastating," Bushue told the hearing.

Concerns about Trade War and Tariffs
The witnesses at the hearing warned that US President Donald Trump’s tariff-fueled trade war puts the lucrative access to Canadian and Mexican markets at risk. They emphasized that a failure to renew the trade deal would be catastrophic for their industries. Austin Rohlfing, a soybean farmer, said that "our industry would not survive a long tariff battle with our two closest customers." The witnesses also raised concerns about the impact of tariffs on their businesses, with some warning that they would be forced to go out of business if the trade deal is not renewed.

Technical Issues with the Agreement’s Implementation
Certain sectors, while supporting the trade deal’s extension, raised technical issues with the way it is being implemented, with the bulk of criticism from Wednesday’s speakers targeted at Mexico. Avocado growers raised concerns that inspections of imported avocados from Mexico are inadequate to stop the risk of pests and asked for quotas to limit the amount of avocados coming in tariff-free. Florida’s fruit and vegetable growers claimed Mexican government subsidies are undercutting their business and urged the Trump administration to push for tariff action. Teddy Koukoulis, chair of the North American Blueberry Council, said US blueberry exports to Canada have risen extraordinarily as a result of the trade agreement, but raised concerns about Mexico’s monitoring of labor standards.

Criticism of Canada’s Agricultural Trade Practices
Canada’s agricultural trade practices did not escape without criticism, particularly for its protection of the dairy sector. Shawna Morris, executive vice president of the National Milk Producers Federation and the US Dairy Export Council, said that "in contrast to Mexico, Canada has always been a particularly challenging dairy trading partner." Becky Rasdall Vargas, senior vice-president of the International Dairy Foods Association, urged the Trump administration to preserve the positive elements of CUSMA while rectifying what she called violations of the agreement. Canada’s implementation of the agreement "has actually limited US dairy exporter access to the Canadian market instead of improving it as was intended," Rasdall Vargas told the hearing.

Conclusion and Next Steps
The hearing will continue for two more days, with nearly 150 people scheduled to present, grouped by industry. The testimony at the hearing will, in theory, feed into the Trump administration’s decision whether to extend CUSMA when it’s up for review on July 1, 2026. Under federal law, the USTR must by January 2 report to Congress its recommendation on renewing the trade agreement or taking other action. The outcome of the hearing and the subsequent decision by the Trump administration will have significant implications for the future of trade between the US, Canada, and Mexico.