Canada optimistic North American free trade pact will survive
By AFP
February 26, 2026
Canada's minister for US trade Dominic LeBlanc was optimistic about the future of a North American free trade agreement - Copyright AFP Yuri CORTEZ
The Canadian official responsible for US trade voiced optimism Thursday about the future of a North American free trade agreement, a pact derided by President Donald Trump and set for review this year.
Dominic LeBlanc, Ottawa’s minister for Canada-US trade, also cast doubt on the notion that Trump could ditch the agreement entirely, something the president has reportedly weighed as tension with Canada has mounted.
“I’m not pessimistic about the trilateral framework renewing,” LeBlanc told the Canadian Club of Toronto, referring to the United States-Mexico-Canada agreement, which Trump signed and praised during his first term.
LeBlanc noted that when Trump announced new global tariffs last week to replace the levies invalidated by the US Supreme Court, the White House swiftly confirmed USMCA compliant goods would remain tariff exempt.
“They’re doing that because it’s in the American economic interest to do that,” LeBlanc said.
– ‘Not a renegotiation’ –
Under the originally agreed terms, the USMCA is to be reviewed in July.
Trump has called the deal “irrelevant” and said it was offering “no real advantage” to the United States.
US media have reported that he is considering scrapping the deal while seeking a separate arrangement with Mexico, a plan that has reportedly gained momentum since Canadian Prime Minister Mark Carney delivered a searing critique of US leadership at the World Economic Forum last month.
“The review is not a renegotiation,” LeBlanc said, underscoring that the deal does not expire until 2036.
“If there’s no consensus in the review, the agreement continues on.”
LeBlanc also said that Trump’s dismissive rhetoric about the USMCA does not match his trade team’s posture.
“There is a public prosecution of the argument, the political argument, in the United States, and there are the private government to government to government conversations which are not discouraging.”
LeBlanc said he expected to meet with US Trade Representative Jamieson Greer in Washington next week and believed the United States was ready to be specific about their desired USMCA adjustments.
“We’re ready for those conversations,” he told the Canadian Club.
Free trade with the United States is crucial to the Canadian economy.
Trump’s sector specific tariffs targetings autos, steel, aluminum and lumber have caused significant economic pain in Canada.
But Trump’s broad adherence to the USMCA has left about 85 percent of two-way trade tariff-free, sparing Canada from crippling economic turmoil.
Carney was flying to India on Thursday to seek closer trade ties, as part of his strategy to backstop Canada’s economy should free trade with the US collapse.
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For at least 34 years, Canada held an unbroken grip on the top spot in US trade. In 2025, Mexico ended it, and the timing could hardly be more consequential.
According to reports from Bloomberg and Forbes, Mexico finished 2025 as the leading destination for US merchandise exports, the largest source of US imports and, by extension, the dominant overall US trade partner – a clean sweep no country has achieved since Canada managed it in 2006. It accounted for 15.6% of total US two-way goods trade, more than double China's 7.4%, in a transformation that has unfolded remarkably quickly. Five years ago, as USMCA was being implemented, China led all US trading partners with nearly 15% of total trade. Today, the Asian superpower ranks third.
The numbers alone tell only part of the story. The top US exports to Mexico – refined petroleum, motor vehicle parts, computer components, computers and semiconductors – reflect an industrial relationship built around shared supply chains under the nearshoring model rather than simply consumer demand. On the import side, four of the five biggest categories are tied to the North American automotive industry. Mexico is not so much a trading partner as a production partner.
Yet the relationship faces its most fraught political test in years. US President Donald Trump has reportedly asked aides why he should not withdraw from USMCA, the trade agreement he championed in 2020, ahead of the treaty's mandatory six-year review deadline of July 1. He could technically do so with six months' notice. Bloomberg columnist Juan Pablo Spinetto argues this would amount to a self-inflicted wound: abandoning USMCA would disrupt supply chains, threaten American manufacturing jobs, push up import prices on everything from cars to avocados and trigger backlash from the US Chamber of Commerce and bipartisan Congressional supporters of the pact.
The peso barely moved after reports of Trump's deliberations emerged, suggesting investors assign low probability to a full withdrawal. But the uncertainty itself carries costs, potentially dampening investment flows into Mexico and prolonging the kind of instability that has already weighed on the country's 0.8% GDP growth in 2025.
Integration between the two countries runs much deeper than trade statistics capture. Mexicans living in the US send home more than $60bn per year in remittances. Mexico is the top foreign destination for American tourists. In New Mexico, California and Texas, Latinos are now the largest population group. In parallel, a growing wave of American expats relocating to Mexico is reshaping neighbourhoods from Baja California to Mexico City.
The strategic logic, Spinetto argues, is difficult to escape. If Washington is serious about decoupling from China, reindustrialising its economy and securing critical supply chains, Mexico is not the obstacle, but rather a central part of the solution. Mexico's share of US trade has more than doubled relative to China's in five years, driven not by political goodwill but by geography, manufacturing integration and demographic reality. Those are not conditions that dissolve overnight when a trade agreement is threatened.
Whether that case gets made clearly in the White House, or gets lost in the noise of erratic tariff threats and negotiating posture, may be the defining question of the USMCA review.
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