As Canada’s Ambassador to the United States, Kirsten Hillman, prepares to conclude her tenure on February 15 after more than six years, she has expressed uncertainty about the prospects of a timely review of the United States-Mexico-Canada Agreement (USMCA). The complex dynamics of international trade and shifting U.S. policies under President Donald Trump add layers of complexity to this crucial trilateral relationship.
Transitioning Leadership
Hillman, who stepped into the role of official ambassador in early 2020 after serving as acting ambassador in 2019, will be succeeded by Mark Wiseman, an investment banker with close ties to Prime Minister Mark Carney. With a wealth of experience in diplomacy, Hillman has navigated the intricacies of U.S.-Canada relations during a period marked by significant change and uncertainty.
USMCA Review Looms Large
The USMCA, known in Canada as CUSMA, stipulates that Canada, the U.S., and Mexico must signal their intentions regarding renewal by July 1, 2026. Hillman remarked that predicting the outcome of the upcoming review, expected to evolve into a renegotiation, is fraught with challenges. “It’s very difficult to predict,” she stated in a recent interview. “This is the first time that we’re using this review process. And so there’s no history to go on, to know exactly how that’s going to run.”
In light of the U.S. administration’s recent inclination towards protectionist policies and tariffs, Hillman underscored the need for clarity on how these shifts might affect the broader economic relationship between Canada and the United States.
The Stakes of Renewal
The importance of the USMCA cannot be overstated for Canada. The agreement underpins over $1 trillion in annual trade between Canada and the U.S., serving as a critical safeguard against U.S. tariffs. Currently, products compliant with the agreement’s rules are exempt from Trump’s proposed 35% “fentanyl” levy, which impacts more than 90% of Canadian exports to the U.S.
Despite the challenges ahead, Hillman conveyed a sense of optimism regarding the agreement’s future. She noted that while discussions around potential bilateral agreements have emerged, businesses overwhelmingly favour a trilateral framework. “I think it’s what the three business communities want. That’s my answer,” she asserted when asked about the longevity of the trilateral deal.
Navigating Complex Relationships
Hillman also addressed concerns regarding Canada’s diplomatic engagement with China amid rising tensions with the U.S. Trump has recently threatened to impose severe tariffs on Canadian goods if Ottawa moves forward with a trade agreement with Beijing. However, Hillman is confident that Canada need not choose between fostering a robust relationship with China and renewing its commitments under the USMCA. She emphasised the practicality of balancing international relationships: “The United States has a massive trading relationship with China,” she pointed out, referencing the value of over $438 billion annually.
Why it Matters
As Hillman prepares to hand over the reins, the future of the USMCA hangs in the balance, with significant implications for Canada’s economy and international standing. The ability of the three nations to navigate these negotiations effectively may redefine not only their trade relationships but also their geopolitical alliances. The stakes are high, and as Hillman aptly noted, “this will probably continue to be a path that is not completely straight and not without certain distractions.” The outcome of the review will be pivotal in shaping North America’s economic landscape for years to come.