US Identifies Key Trade Irritants with Canada
Provincial restrictions on alcohol sales and the federal “Buy Canadian” procurement policy emerge as significant barriers in bilateral trade, according to the latest annual reports the Office of the United States Trade Representative.
Market access limitations enforced by provincial liquor control boards severely restrict exports of American wine, beer, and spirits. Several provinces removed U.S. alcohol products from shelves last year following tariffs imposed by President Donald Trump. The U.S. demands the immediate and permanent restoration of these products across all Canadian markets.
Concerns Over Buy Canadian Procurement Rules
The federal “Buy Canadian” policy prioritizes domestic products and workers in government contracts valued at $25 million or more. U.S. firms report challenges in bidding, including requirements to disclose board of directors’ information or demonstrate independence of Canadian subsidiaries from U.S. parents.
Additional Trade Hurdles
Other barriers include delays in aircraft validation processes and steep tariffs on U.S. dairy imports exceeding quota levels, such as 245% on cheese and 298% on butter. U.S. goods exports to Canada reached $336.5 billion in 2025, a nearly four percent decline from 2024, with Canada ranking as the second-largest market for American products.
Lagging Trade Negotiations Ahead of CUSMA Review
Discussions with Canada for the mandatory review of the Canada-U.S.-Mexico Agreement (CUSMA) trail those with Mexico. U.S. Trade Representative Jamieson Greer stated that negotiations advance more swiftly with Mexican counterparts as the administration seeks modifications to the pact, originally negotiated to replace NAFTA.
While CUSMA protects compliant goods from Trump’s global 10% tariffs, separate duties persist on Canadian steel, aluminum, autos, lumber, and cabinets. The administration initiated Section 301 investigations into forced labor in supply chains, targeting Canada among others, following a Supreme Court decision limiting presidential tariff authority.
The report notes that Canada’s measures against forced labor imports lack effective enforcement, potentially allowing tainted goods to enter the market and suppress costs unfairly.
Strained Relations and CUSMA’s Uncertain Future
Greer highlights ongoing barriers, such as provincial alcohol bans, complicating bilateral talks. Tensions escalate amid Trump’s tariffs and annexation rhetoric.
CUSMA faces review this year, with Trump deeming it irrelevant. Greer suggests replacing it with separate bilateral deals. Parties must decide by July: renew for 16 years, withdraw, or opt for annual reviews extending up to a decade. Both Ottawa and Mexico City prioritize preserving the trilateral framework, evidenced by recent high-level trade missions.
