Canada Puts CUSMA Review on the Back Burner as Steel and Auto Tariffs Take Centre Stage

Canada’s top diplomat in Washington is urging patience on the broader trade deal review while pushing hard to resolve a more immediate threat: the wave of U.S. sectoral tariffs that are squeezing Canadian industries right now.

Mark Wiseman, Canada’s ambassador to the United States, said Monday that the ongoing review of the Canada-U.S.-Mexico Agreement better known as CUSMA is not the fire that needs putting out. The real heat, he argued, is coming from Washington’s use of Section 232 of the U.S. Trade Expansion Act, which has slapped tariffs on Canadian steel, aluminum, and automobiles outside the protections the trade agreement would otherwise provide.

“Those tariffs are the ones that are biting,” Wiseman told an audience at a Toronto event, referring to the financial strain being felt across Canadian industry, businesses, and the workforce. He was blunt about where Ottawa’s attention needs to be focused: “The focus for us is trying to find a way through those sectoral 232 tariffs. That’s the issue.”

Much of the public discussion around Canada-U.S. trade relations has zeroed in on July 1 the date that kicks off the formal CUSMA review process. But Wiseman pushed back against the notion that something dramatic happens if that date passes without a resolution.

“We are not falling off of a cliff on July 1,” he said plainly.

The ambassador reminded listeners that CUSMA, signed in 2020, is a 16-year agreement that technically doesn’t expire until June 30, 2036. The July 1 trigger simply opens the door to a renewal conversation one that would extend the deal from 2036 to 2042 if successful. If no renewal is reached, the agreement doesn’t collapse; it simply continues until its natural expiry.

“Renewal of the agreement means you restart the 16-year clock,” Wiseman explained, adding that negotiators can afford to “take a deep breath on the CUSMA review.”

The negotiating team, led by Minister of Canada-U.S. Trade Dominic LeBlanc and chief negotiator Janice Charette, has been given a clear mission: deal with the tariff problem first.

The crux of Canada’s frustration lies in the nature of the sectoral tariffs themselves. While the vast majority of Canada’s exports to the United States are CUSMA-compliant and therefore shielded from Trump’s broader tariff agenda, the Section 232 measures operate on a different legal track altogether.

Wiseman did not mince words about this distinction, calling the tariffs “arguably in violation of CUSMA” and warning that unlike trade disputes that can simmer for years, these levies are inflicting damage daily. “Unlike everything else under CUSMA, the default is they’re staying in place,” he said, “and they are incredibly painful to wide sectors of the Canadian economy.”

Earlier this month, President Donald Trump signed a proclamation tweaking certain Section 232 tariffs on steel, aluminum, and copper imports though the changes offer only partial relief.

Under the new order, tariffs on some steel and aluminum derivative products, including certain agricultural machinery and residential HVAC equipment, were reduced from 25 per cent to 15 per cent. Mobile industrial equipment such as bulldozers and forklifts was made subject to a 15 per cent tariff when imported from qualifying trade deal countries.

The proclamation also introduced an incentive for foreign manufacturers: companies whose capital equipment is composed of at least 85 per cent U.S.-sourced steel or aluminum by weight may qualify for a reduced tariff rate of 10 per cent.

While the adjustments signal some flexibility from Washington, Canadian officials are making clear that piecemeal changes fall short of what they’re seeking. The broader goal remains a resolution that lifts the cloud of Section 232 tariffs entirely and for that, the negotiations have only just begun.