On July 1, Canada, Mexico, and the United States will hit the first real deadline in the review of their trilateral trade pact, known as the United States-Mexico-Canada Agreement (USMCA). By then, the three governments must either endorse renewal or signal an intention to exit, even as negotiations continue. That milestone matters not only for North American trade. It is the first major test of whether Ottawa has more leverage in its relationship with Washington than its own policy establishment has taught it to expect.
The familiar Ottawa script runs like this: Washington presses, Ottawa defends, and Canada absorbs most of the pain. In its sharpest current form, Steven Globerman and Jock Finlayson of the Fraser Institute have argued that retaining USMCA, which Canada calls CUSMA, will require Canada to accept “politically difficult concessions” on supply management, cultural protection, banking, telecommunications, and drug pricing. Patrick Leblond of the University of Ottawa has publicly characterized the U.S. posture as telling Canada, “We’re going to put the gun to your head, and you’re going to give us what we want.”
On July 1, Canada, Mexico, and the United States will hit the first real deadline in the review of their trilateral trade pact, known as the United States-Mexico-Canada Agreement (USMCA). By then, the three governments must either endorse renewal or signal an intention to exit, even as negotiations continue. That milestone matters not only for North American trade. It is the first major test of whether Ottawa has more leverage in its relationship with Washington than its own policy establishment has taught it to expect.
The familiar Ottawa script runs like this: Washington presses, Ottawa defends, and Canada absorbs most of the pain. In its sharpest current form, Steven Globerman and Jock Finlayson of the Fraser Institute have argued that retaining USMCA, which Canada calls CUSMA, will require Canada to accept “politically difficult concessions” on supply management, cultural protection, banking, telecommunications, and drug pricing. Patrick Leblond of the University of Ottawa has publicly characterized the U.S. posture as telling Canada, “We’re going to put the gun to your head, and you’re going to give us what we want.”
These are serious readings of a serious situation. But they are readings inside a frame that treats asymmetry as the only thing worth reading. The United States still took 71.7 percent of Canadian goods exports in 2025, even as that share fell to its lowest level since the early 1980s. The asymmetry is real. The fatalism attached to it is not.
Prime Minister Mark Carney enters this phase with a parliamentary majority and unusual domestic runway. An Abacus Data survey conducted in February found that only 45 percent of Canadians believed that the end of USMCA would be bad for Canada; a majority said it would make no difference or be a positive. Half of respondents said Carney was protecting Canada’s core interests without giving up too much. Canadians, Abacus concluded, prefer strategies that build leverage and diversify trade relationships rather than trading concessions for short-term calm. U.S. President Donald Trump, by contrast, approaches the same moment under sharper compression: energy volatility after the Iran shock, affordability pressures rising, and a White House that cannot politically afford disruption in precisely the sectors where Canada matters most. Trump is still the stronger actor, but he has constraints.
A weaker country does not need to be equal to a stronger one to have leverage. It needs to matter in domains the stronger actor cannot easily replace, cannot easily stabilize without assistance, or cannot afford to disrupt politically. The question is not whether Canada is more powerful than the United States. It plainly is not. It is whether Ottawa occupies enough strategically useful terrain to shape Washington’s calculations at the margin.
Energy is the clearest case. Canada remains by far the dominant external supplier of crude to the United States, accounting for roughly 60 percent of U.S. crude imports. Those flows are embedded in refinery configurations, pipeline geography, and the architecture of North American energy. The integration cuts both ways: Canadian crude largely has to go south because that is where the pipelines go. But the symmetry breaks in a crisis. Short-term disruption costs fall on U.S. consumers at the pump during an affordability squeeze and on U.S. refineries engineered specifically for heavy Canadian crude. Canada would suffer too but not suffer on the same political clock.
The post-Iran environment makes that asymmetry harder to ignore. U.S. consumer prices have risen on war-related energy pressure, and consumer sentiment has weakened as fuel costs have returned to the center of public concern. Energy stability is no longer an abstract strategic good. It is part of the White House’s political survival problem. Washington is not standing still—it has moved toward politicized access to Venezuelan barrels and continued to shape Iranian flows through a mix of blockade and sanctions relief. But Venezuelan recovery will be gradual, Iranian supply remains hostage to war, and Canadian crude remains the most deeply integrated and politically reliable external energy relationship available to the United States.
The logic extends beyond crude. Consider nickel, a metal essential for electric vehicle batteries, stainless steel, and naval and munitions alloys. The United States is 41 percent net import-reliant, with Canada as the leading supplier. Indonesia dominates global nickel refining and is projected to control more than 70 percent of capacity by 2030, with much of that build-out financed through Chinese investment, offtake agreements, and joint ventures—precisely the concentration U.S. industrial policy is trying to unwind.
Canada is the largest Western producer of mined nickel, with operations at Sudbury and Voisey’s Bay directly connected to U.S. supply chains. For a White House that has made de-risking from China a signature theme, disruption to the Canadian nickel relationship would be not merely inconvenient but ideologically embarrassing. A joint submission to Ottawa from the Canada West Foundation, the Business Council of Alberta, and the Canadian Global Affairs Institute has made this case directly: Strengthening USMCA’s rules of origin would reduce North American dependence on Chinese-controlled supply chains while solidifying Canada’s role as a dependable supplier. That line deserves wider purchase than it has so far received.
Timing amplifies all of this. Carney’s Liberals hold 174 of 343 seats in Parliament, a majority that reduces dependence on opposition support and lengthens the government’s time horizon. Carney’s government could stay on into 2029, past Trump’s mandate. The U.S. president, by contrast, approaches this period under pressure politically due to the Iran war, rising prices, and the Jeffrey Epstein files, among other issues, with midterm elections looming that could give opposition Democrats control of at least one house of Congress. Put bluntly: Trump has urgency. Carney has runway.
There is a further risk Ottawa cannot ignore. Forces in Washington may not merely want to tighten USMCA but to thin it out, bilateralize it, or eventually replace it. Trump has said the pact could be allowed to expire, and U.S. Trade Representative Jamieson Greer has openly discussed dealing separately with Canada and Mexico, potentially building separate protocols with each on top of a core trilateral pact. The United States and Mexico have already begun bilateral scoping talks; those with Canada are expected in May. A segmented review would let Washington play Canada and Mexico against each other, increase pressure on both, and make North American governance less predictable for the United States itself—encouraging duplication, competitive concessions, and a more fragmented continental market in precisely the sectors Washington says it wants to secure.
None of this guarantees orderly bargaining. Trump has long treated the relationship with Canada less as a settled alliance than as a negotiation in which Canadian exemptions look, from Washington, like unreciprocated concessions. A counterpart who reads interdependence primarily through zero-sum pressure will often prefer visible wins to efficient outcomes. The risk for Ottawa is not only economic loss but performative loss—giving Washington a public win that travels well in rallies and headlines while surrendering more substantive ground than the optics justify. The task is to manage the appearance of motion without yielding the structure of the position.
What should Ottawa actually do with this moment? A self-respecting approach would do three things. First, Carney should frame the review as part of a broader continental resilience package, explicitly linking trade to energy reliability, Arctic coordination, and critical minerals supply. Second, Ottawa should prepare a Canada-U.S. critical minerals memorandum of understanding—on nickel, potash, and uranium—that it is willing to sign at the conclusion of a successful review but not before. Third, Canada should coordinate closely enough with Mexico City to make clear that separate-track negotiation is not on offer and that bilateralization will slow, not accelerate, Washington’s access to what it actually wants. None of this is coercion. It is the ordinary conduct of a country that understands what it brings to the table.
Carney was right when he said at Davos that middle powers are not powerless in a more coercive world. But if that diagnosis is serious, the practical implication for Canada is not bravado. It is less defeatist statecraft. Trump will likely always see Canada as a country that benefits too much, protects too much, and yields too little. What can change is whether Ottawa continues to treat vulnerability as the whole story.
The July review decision will reveal which Ottawa has shown up. If Canadian negotiators are prepared only to defend supply management and limit tariff damage, the old pattern will hold, and the broader relationship will drift toward bilateralization on Washington’s terms. If they arrive prepared to link the trade file to the assets Washington actually needs—and to withhold the fullest version of those assets until the relationship is on a more stable footing—Ottawa will have done something Canadian statecraft has rarely done in the Trump era: behaved like a country that knows its own weight. The asymmetry will not disappear. It will, for once, be worked with rather than merely absorbed.
