Overview – The Canada-US Debacle 

A discussion of current trends in international trade law needs to begin with the unprecedented and acrimonious trade war launched by the Trump administration against Canada starting in early 2025, the outcome of which is far from certain. Even if some kind of armistice is reached in the next few days or weeks, these recent events will profoundly shape the bilateral relationship for years to come. 

The origins of that war are rooted in the destructive MAGA ideology of the Trump administration, unapologetically violating US obligations under the WTO Agreement, shattering the foundations of the post-WWII Bretton Woods rules based system at large. That’s the global picture in a broad sense. 

When it comes to US-Canada trade, there’s the same disregard for treaty obligations. Even though a free trade partner under CUSMA, Trump hit Canada with duties (on autos, steel, aluminum, etc.) in February 2025 saying. “We don’t need their cars, we don’t need their lumber, we don’t need their energy. We don’t need anything from Canada.” 

Shaky bilateral negotiations ahead of the mandated CUSMA review were cancelled by Trump in October 2025. Even with some CUSMA-compliant trade being duty free, the relationship deteriorated further in July 2026, with Trump threatening Canada with 50% tariffs on hundreds of items under the discredited and long forgotten Smoot-Hawley Tariff Act of 1930. 

When negotiations to resolve these threatened tariffs collapsed on August 21st and the 50% US duties came into force, Canada announced it would retaliate, putting out a list of US imports worth some C$28 billion annually. Trump then threatened additional duties if Canada followed through with these.

This unprecedented trade war has damaged the CUSMA beyond repair. While it remains nominally in force, its centrepiece and core rationale — duty free trade — is gone. And with that, the deal’s very purpose disappears. 

At this juncture, it’s difficult to see how Canada and the US can restore mutual confidence. Even if the two sides resume talks, these will be fraught and uncertain. Even if the CUSMA is not officially terminated, it’s evident that North American free trade is now a fiction and unlikely to be restored in any comprehensive way even after the end of Trump’s term in office. 

The Global Context – Dealing with Hegemonic Powers 

Let’s turn to the global context. In his highly regarded speech at the WEF in Davos in January 2026, Prime Minister Carney said government leaders needed to take the world as it is, not as we might like it to be, that nostalgia was not going to allow middle-tier countries to successfully confront today’s global challenges. 

The PM called on these middle powers to work together to counter the rise of hegemonic great power rivalry, in order to build a more cooperative, resilient world. 

The following is a less-than-scholarly summary of how the Canada-US trade war reflects the damage done by the Trump administration to the multilateral trading order generally. 

The main point is that so-called trade “deals” strong-armed by Trump, one-off arrangements with preferences and concessions and reciprocal bargains have destroyed decades of the GATT-based system and the effectiveness and relevance of the WTO as steward of the multilateral trading order. 

This taking the world as it is........

© OpenCanada