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Canada Prepares to Push for Tariff Protection at 2025 USMCA Review

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  Published in Politics and Government on Thursday, December 18th 2025 at 17:48 GMT by The Globe and Mail

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Canada’s Trade Ambitions at the 2025 USMCA Review: A Sector‑by‑Sector Outlook

In a quiet yet strategically important move, Canadian Prime Minister Justin Trudeau is reportedly bracing for a series of “sectoral tariff talks” at the 2025 review of the United States‑Mexico‑Canada Agreement (USMCA). The Globe and Mail’s politics desk, drawing on a political insider who prefers to remain anonymous, details how the PM’s agenda is shaped by both long‑standing trade priorities and the evolving U.S. economic landscape. The article, supplemented by several linked pieces that provide context on the USMCA’s mechanics and recent trade developments, paints a picture of a Canada that is willing to engage, but also determined to protect its domestic industries.

The USMCA Review in Context

The USMCA, signed in 2018 to replace NAFTA, contains a built‑in “review” provision that mandates a comprehensive reassessment every four years. The 2025 review—scheduled to take place in Washington, D.C. from July 15‑20—will convene the trade ministers of Canada, the United States, and Mexico. The Globe and Mail notes that this review is not simply a formality; it is an opportunity for each partner to renegotiate tariff rates, market‑access rules, and other trade mechanisms that may have shifted since 2018. The article also links to an explanation of the USMCA’s tariff schedule, underscoring that many tariffs are fixed for eight years, but the agreement allows for certain sectoral adjustments at each review.

The PM’s Strategic Focus

According to the insider, Trudeau’s expectations are rooted in a pragmatic assessment of the three‑way trade dynamics. “He’s looking to secure what Canada needs—especially in sectors where the U.S. is seeking change,” the source says. The primary sectors on the docket, as outlined in the article, include:

1. Automotive – The USMCA’s rules of origin for cars have long been a point of contention. U.S. lawmakers have called for tighter requirements to ensure a higher share of U.S.–produced parts. Canada, which has a robust automotive manufacturing base, is expected to push back to preserve tariff‑free status for Canadian vehicles that meet the current criteria.

2. Agriculture & Dairy – The U.S. has been lobbying to reduce the tariffs it levies on Canadian dairy products. The Globe and Mail highlights a linked policy briefing that shows the U.S. seeks a gradual phase‑in of tariff reductions over 10 years, a proposal Canada is reluctant to accept in full.

3. Aerospace – With the U.S. demanding more liberalized rules of origin for aircraft parts, Canadian aerospace firms are closely watching the talks. The insider notes that Canada aims to maintain its tariff‑free access for parts that satisfy current USMCA criteria.

4. Digital & E‑Commerce – Although a smaller portion of the overall tariff structure, the article points out that digital trade is a growing frontier. The PM’s office has hinted at a push for streamlined customs processes and clearer rules for cross‑border data flows.

5. Financial Services – Canada’s financial institutions, especially in the fintech space, are hoping for deeper market access. The Globe and Mail’s linked trade database shows that while the USMCA offers some provisions for financial services, the U.S. remains cautious about expanding Canadian participation.

Negotiating Tactics and Political Underpinnings

The article delves into the PM’s bargaining strategy, noting that the Canadian government will employ a “twin‑track” approach: a high‑level summit to set broad priorities and a series of sectoral negotiations to hammer out specifics. The political insider points out that Trudeau’s team is likely to lean on the U.S. side’s internal divisions, especially the recent split between the Republican‑led House and the Biden‑appointed administration on trade issues. The PM has reportedly been engaging with U.S. officials who are sympathetic to Canadian concerns, especially in agriculture.

Moreover, the Globe and Mail links to a statement from the U.S. Trade Representative that the U.S. will present a “flexible” stance on tariff reductions, a point the PM’s office appears to have taken seriously. Trudeau’s office, however, has signalled that it will be cautious about any unilateral tariff cuts that could hurt Canadian exporters. “We’re not going to let Canada’s economic base be sacrificed for short‑term political gains,” the insider says.

Potential Outcomes

While the article refrains from predicting a definitive outcome, it does lay out several likely scenarios:

• Status Quo with Minor Adjustments – The most probable result is a maintenance of existing tariff levels, with only minor sectoral tweaks. This would keep Canada’s dairy and automotive industries largely protected while allowing some concessions in digital trade.

• Partial Tariff Reductions – If the U.S. pushes harder, Canada might agree to phased reductions in dairy tariffs over a longer period, perhaps in exchange for broader market access in the U.S. e‑commerce space.

• Escalated Negotiations – Should disagreements over rules of origin become intractable, the review could extend into a more prolonged negotiation process, potentially delaying the formalization of any changes until after the 2027 review cycle.

The article concludes by noting that the PM’s expectations are not merely about tariff levels but also about preserving Canada’s leverage in the broader North American trade ecosystem. Trudeau’s government is clearly signaling that it will use the review as a platform to reinforce Canada’s commitment to fair trade, while simultaneously seeking to secure tangible benefits for Canadian businesses.

Final Thoughts

The Globe and Mail’s in‑depth look at the upcoming USMCA review offers a valuable snapshot of Canada’s trade strategy in a shifting geopolitical environment. By focusing on sectoral tariff negotiations, Trudeau’s administration is positioning itself to protect key Canadian industries while also recognizing the need for flexibility in an era of rapid digital transformation. As the review approaches, stakeholders in Canada and the U.S. will be watching closely to see whether the political and economic calculus outlined in the article translates into concrete policy shifts that shape the North American trade landscape for years to come.