Introduction

Unifor is Canada’s largest union in the private sector, representing 320,000 workers in virtually every major economic sector. Unifor represents approximately 120,000 members in trade-dependent workplaces including in manufacturing, energy and transportation, among others. 

Unifor’s prior interventions on the operation of CUSMA

Unifor played an active role in the 2017-2018 tripartite renegotiation of the North American Free Trade Agreement (NAFTA), CUSMA’s predecessor agreement. Unifor presented a broad operational critique of the decades-old NAFTA including the agreement’s failure to protect workers’ rights and wages from unfair competition, it’s enabling of job relocation to low-wage jurisdictions in North America, and the privileges it bestowed on private investors to challenge laws deemed unfavourable to profit-making with powers to effectively sue governments for damages, among other concerns. These critiques, along with numerous proposed reforms, are documented in Unifor’s July 2017 position statement on the renegotiation of NAFTA.[1] 

The subsequent CUSMA deal, while retaining many of the same trade policy features of the original NAFTA (along with certain notable concessions made by Canada to the United States)[2], strengthened necessary exemptions for Canada’s arts and cultural industry, and also introduced groundbreaking provisions to address certain structural inequalities in North American trade and preserve key national policies.  Among the most notable provisions in CUSMA include the novel Rapid Response Labour Mechanism (RRLM) – an enforcement mechanism to ensure freedoms of collective bargaining and free association were upheld in Mexican labour relations. Additionally, the new deal included a dedicated labour chapter containing broad provisions aimed at addressing enforcement gaps, as well as guardrails protecting Canada’s cultural industry and preservation of economic sovereignty rights of Indigenous Peoples.  These, and other, notable provisions are reflective of positive outcomes resulting from comprehensive and unprecedented stakeholder consultation, including with labour unions. 

In May of 2024, Unifor President Lana Payne delivered testimony before the House of Commons Committee on International Trade (CIIT) for its preparatory study on CUSMA ahead of its scheduled six-year trinational review. In that testimony, President Payne expressed discomfort at U.S. administration officials signalling disruption and disquiet for the Canadian economy in this CUSMA review.  The message delivered by Unifor was that “Canada cannot approach this review on its back foot” and that government officials “must remind Americans how interdependent our industrial economies have become but can’t shy away from communicating our own concerns.”[3] 

In October of 2024, Unifor submitted to Global Affairs its reflections on CUSMA’s first years of operation, including lingering disparities, inadequacies and flaws, as well as certain positive attributes[4]. In that submission, and supplementing the message delivered to the CIIT, Unifor proposed 15 specific recommendations for Canadian officials to consider, which can be reviewed here:  https://www.unifor.org/resources/our-resources/unifor-submission-government-canada-consultations-cusma 

Approaching the six-year CUSMA review in a new political context

The North American political and economic landscape today is far different than it was in October of 2024, the last time Global Affairs consulted Canadians on CUSMA. Decidedly, the U.S. had signalled its intent to renegotiate (not simply renew) the CUSMA deal with Canada and Mexico and intends to use the CUSMA’s Article 34 withdrawal mechanism to secure negotiating leverage. The threat of U.S. withdrawal from CUSMA and apparent willingness to undermine its own decadeslong foreign policy of deeper continental integration, is a potent betrayal of bilateral relations and manipulation of U.S. market power. Use of the renewal clause to exert pressure on America’s northern and southern neighbours for concessions, as ex-Biden Administration USTR Katherine Tai stated bluntly, a “feature, not a bug.”[5] 

However, Biden Administration calls to the restructure the CUSMA to achieve strategic ends pales in comparison to the Trump Administration’s weaponization of cross-border trade - using political influence and extortion to steal away industrial investments and jobs, to impose extra-territorial influence and authority on the national security agenda of foreign nations, and – in its worst offense – threaten Canadian sovereignty. 

Trump’s unilateral imposition of tariffs on Canada via the International Emergency Economic Powers Act announced in February of 2025 (that came into effect in March of 2025), was an egregious overreach of executive authority. At the stroke of a pen, the President undermined the basic tenets of international trade law, and the principle of ‘good faith’ negotiation.  The imposition of IEEPA tariffs on Canadian goods exports effectively ended the operation of the CUSMA treaty which, as Unifor stated during an October 20, 2025 meeting of the CIIT, a trade deal ‘almost in name only’.[6] 

Subsequent national security tariffs imposed by the United States, and specifically those on finished light duty vehicles, represent a complete abrogation of a negotiated commitment made in a 2018 side letter by the Trump Administration to Canada.[7] In that letter, the United States committed to providing Canada with 60 days notice of any imposition of section 232 tariffs on vehicles and parts – allowing for both countries to engage in bilateral negotiation on an appropriate way forward. The letter also provided for an exemption of certain volumes of finished vehicle exports from Canada. Neither of these commitments were upheld. 

U.S. tariffs imposed on Canada

Today, the Trump Administration has imposed a complex web of national emergency (IEEPA) and national security (Trade Expansion Act, s.232) tariffs affecting Canadian goods exports, including steel, aluminum, automotive, copper and wood products, to start. The executive branch tariffs imposed by the president so far are in addition to longstanding, and unjustified, anti-dumping and countervailing duty tariffs the U.S. has imposed on Canadian softwood lumber.  The number of Canadian goods subject to U.S. import tariffs will likely expand in the coming weeks and months as the Commerce Department concludes additional national security investigations covering industrial goods such as pharmaceuticals, aerospace, semiconductors and others. The U.S. Commerce Department also continues to expand the number of products covered by existing section 232 tariff orders.    

Strategic considerations for CUSMA renewal

Tariffs imposed by the Trump Administration since the President’s inauguration demonstrates that the U.S. is a duplicitous and untrustworthy trade partner. This matters as Canada prepares for discussions with the United States around CUSMA’s renewal. 

Prime Minister Carney has stressed, on numerous occasions, that despite unprecedented U.S. trade aggression, Canada is situated comparatively better than other nations, measured on the share of exported goods subject to tariffs. The Prime Minister has also expressed that, within the current of U.S. tariff policy. It is misleading to downplay the economic impacts of U.S. tariffs on Canada’s industrial economy in this way. As the U.S. implements new tranches of section 232 tariffs, and expands the product scope of existing orders, the share of tariffed goods will increase – as will the pressure on Canadian workers, their employers and the industrial economy overall.  

The Prime Minister’s view that Canada has the ‘best trade deal of any country’[8] mostly reflects that U.S. IEEPA tariffs exempt CUSMA-complying exports. But as witnessed this past week (as Trump threatened to unilaterally increase tariffs on Canada in retribution for the Ontario government’s television ads), it is inaccurate to suggest that Canada retains an advantage over other U.S. trading partners. The dynamics of Canada’s industrial integration with the U.S. is unlike any other country, far more interdependent and disproportionally burdened by tariffs.  CUSMA itself offers nothing more than a false sense of security. 

CUSMA-compliance has mitigated some burden of U.S. tariffs on Canadian exporters. But it is not the CUSMA agreement, itself, providing Canadian exporters the security. Rather, it’s the existence of a CUSMA exemption within the President’s tariff-imposing executive actions that offers the protection. Therefore, it is wrong to view CUSMA, itself, as any durable shield for the Canadian economy. It is also wrong to approach CUSMA’s 2026 renegotiation with desperation and a desire to renew the trade agreement regardless the concessionary costs to Canada’s economy, its workforce and its sovereignty. In fact, and given the significant dependence on cross-border imports from Canada, whether in natural resources, intermediate inputs or finished goods, it is just as likely the CUSMA-compliance carveout is a strategic necessity for the U.S. 

Canada must approach its negotiating strategy with the understanding that tariff-free intermediate goods, within North America, matter a great to the U.S. – and that Canada does have leverage in these talks. The Trump Administration has gone to great lengths to preserve the CUSMA carveout, the special treatment afforded Canadian oil, gas, potash and other critical resources, as well as special treatment afforded to Canadian automotive parts within the U.S.’s complex automotive parts tariff offset scheme. 

It is hard to foresee the U.S., at least in the next 12 months, dismantling a CUSMA-complying import tariff exemption that is enabling the Administration to take an aggressive posture in negotiating with offshore trade partners, without completely derailing the U.S. industrial economy. Trump’s treatment of Canada (and Mexico) has been surgical and careful. At the same time, is also hard to foresee a scenario where the three CUSMA parties fully agree on the agreement’s renewal in July of 2026. Given President Trump’s clear preference for disruptive negotiating tactics and a ‘flooding the zone[9]’ strategy, and his obvious reliance on tariff-free input goods from Canada and Mexico, it is likely that the U.S. opts not to renew the CUSMA in 2026 – triggering a 10-year wind down process that enables parties to continue negotiating for its renewal[10]. This presents the U.S. with a low-risk strategy, that maintains the integrity of CUSMA and satisfies the U.S. desire for tariff-free imports from Canada and Mexico. The U.S. may also invoke – at any time – the six-month withdrawal provision, effectively ending the agreement, although (and as stated above) this could present far greater risk to the U.S. economy. 

It is imperative that Canadian negotiators continue to engage in productive discussions with the United States to secure agreements that protect Canada’s industrial sector. This is of paramount importance. Whether that happens within the CUSMA renewal process or not, is a separate matter. Canada has exceptional leverage, and must use it, to negotiate fair terms and protections for the millions of workers directly and indirectly in the crosshairs of unjust trade actions by the United States – including the imposition of so-called ‘national security’ tariffs on key sectors. 

Canada and the United States share a unique trading relationship. No two countries share a history of cross-border interdependence, and supply chain integration that spans decades – dating back to the 1965 Canada-U.S. Auto Pact. Canada deserves an exceptional agreement, that removes tariffs on strategic sectors, given how exceptional this trade relationship is.  

In its preparation for CUSMA renegotiations, Unifor urges Canadian negotiators to consider the operational deficiencies and other concerns as expressed below. However, in the context of a far larger and complex trade dispute between Canada and the U.S., Unifor urges Canada to also prepare itself to not extend the agreement, if the agreement fails to protect the industrial economy, undermines our national sovereignty, and does not serve Canada’s best interest.     

Reflections on CUSMA’s operation (2020-2025) and recommendations for improvement 

• CUSMA currently provides no certainty for Canadian workers and exporters amid shifting U.S. trade policy and persistent tariff attacks

The Canada–United States–Mexico Agreement (CUSMA) has failed to provide the certainty Canadian exporters were promised. The unilateral implementation of executive tariffs on imported goods by the United States has overridden preferential tariff treatment negotiated under the deal, directly violating its terms.

Canada made significant concessions to the United States during the CUSMA negotiations, including reforms to intellectual property rules and expanded access to Canada’s dairy market. These compromises were justified on the basis of securing predictable, preferential access to the U.S. market. However, the imposition of new U.S. tariffs has effectively rendered those negotiated benefits null and void.

• Under current U.S. trade policy certain North American supply chains are disadvantaged under CUSMA, as compared to more favourable trade terms offered to foreign suppliers. 

CUSMA was professed to strengthen North American competitiveness in the global economy. Instead, it now saddles Canadian and Mexican exporters with disproportionately high tariffs, a problem further exacerbated by the recent Section 232 tariffs imposed on heavy trucks and buses.

Meanwhile, framework agreements struck between the United States and non-CUSMA partners—such as the European Union, South Korea, Japan, and the United Kingdom—have reduced tariffs, despite producing goods with low levels of North American content. This creates export advantages to businesses sourcing little from North America, at the expense of Canadian and Mexican firms that rely heavily on regional supply chains.

Softwood lumber provides a clear example. Persistently high U.S. tariffs on Canadian lumber have spurred rising imports from Europe and other regions without any corresponding increase in U.S. domestic production. U.S. producers simply cannot meet domestic demand, yet Canada continues to face unjustified trade penalties.

• CUSMA parties must address persistent labour and human rights violations

Although positive steps have been made under the RRLM, CUSMA has not fully remedied ongoing labour rights violations in either the United States or Mexico, both of which constitute unfair trade practices under the agreement. There is documented evidence of employer and state interference, as well as intimidation, in union organizing drives in both countries.

This includes high-profile incidents such as the 2024 unionization campaign at the Mercedes-Benz assembly plant in Vance, Alabama – a so-called Right to Work state. Under the RRLM, such violations are actionable when they occur in Mexico—but not when they occur in the United States. This asymmetry represents a significant design flaw in the RRLM, undermining the principle of reciprocal enforcement.

• CUSMA rules must incentivize local production, limiting import dependence in strategic supply chains

CUSMA’s structure continues to disincentivize local production, particularly within the automotive sector, leading to increased import penetration and persistent employment instability. Low Most-Favoured-Nation (MFN) tariff thresholds reduce incentives for importers to comply with complex CUSMA rules of origin. In many cases, it is cheaper to pay the MFN tariff than to restructure supply chains to meet North American sourcing requirements.

The U.S. MFN tariff rate for finished vehicles, excluding new Section 232 or IEEPA tariffs, remains just 2.5%. In contrast, complying with CUSMA’s rules of origin – which require 75% of a vehicle’s value to be sourced from within North America – may involve new investments locally sourced goods, and other compliance measures which imposes costs on exporters.

At an October 2024 U.S. International Trade Commission hearing, witnesses estimated that 20% of vehicles imported from Mexico failed to meet new automotive trade rules, compared to just 2% under NAFTA five years earlier. This demonstrates the growing compliance burden and the inability of a low MFN tariff rate to incentive more regional investment.

CUSMA partners must address this structural imbalance to better align import and domestic production volumes. While the United States bears most responsibility for these distortions, Canada and Mexico should have been fully exempted from Section 232 tariffs, including on light-duty vehicles and auto parts, in line with the bilateral side agreement.

Furthermore, CUSMA parties should consider extending similar local production and labour-content rules should be expanded to other high-value, tradable sectors where feasible, such as in aerospace.

• Limited progress on Mexican worker wages under CUSMA labour provisions

CUSMA’s novel labour provisions have helped democratize union representation and improve collective bargaining in Mexico, but they have not produced significant wage gains. Research shows that Mexican autoworkers experienced only marginal nominal wage increases between 2020 and 2022—gains that were largely offset by high inflation.

This limited progress partly reflects the flexibilities built into the Labour Value Content (LVC) provision of the automotive rules of origin, which allows required “high wage” content to fall from 40% to as low as 25% per vehicle. Moreover, CUSMA’s LVC rules do not establish a mandatory minimum wage of USD $16 per hour for autoworkers. Instead, they set an average pay requirement across production workers in certain facilities—a distinction often misunderstood in public commentary.

• Unequal treatment of aluminum under automotive rules of origin

CUSMA’s automotive rules of origin treat aluminum inputs less favourably than steel. While both materials are subject to the same sourcing thresholds for vehicles, only steel is required to be melted and poured in North America.

Extending similar rules to aluminum—requiring that qualifying aluminum be both smelted and most recently cast in North America—is essential to realizing the intended benefits of the automotive provisions and ensuring supply chain integrity across the region.

• Improving the Rapid Response Labour Mechanism (RRLM)

The CUSMA RRLM shows promise but requires significant improvement. For instance, it cannot address labour rights violations that distort trade between Canada and the United States.

Unifor became the first Canadian union to file a complaint through the RRLM, targeting auto parts manufacturer Frankische, operating in Mexico. The case resulted in a successful organizing drive and the establishment of an independent union. Dozens of other RRLM disputes have yielded positive results for workers seeking independent, democratic union representation. 

To strengthen the mechanism, several reforms are necessary, including the following:

• The definition of a “Denial of Rights” must be expanded to include violations beyond freedom of association and collective bargaining, such as health and safety, discrimination, and child labour.

  • Parties must broaden the number of “Covered Facilities” and sectors eligible for RRLM action.

  • Parties must ensure the safety and protection of witnesses involved in RRLM cases.

  • Canada must establish its own federal consultative body similar to the U.S. Independent Mexico Labor Expert Board to oversee implementation and review.

• Ongoing protection of Canadian arts and culture by maintaining the necessary Chapter 32 ‘cultural exemption’ 

Under CUSMA, Canada preserved a relatively broad exemption of its cultural industries from the terms and conditions of the trade deal, as outlined in Article 32.6 (2). The so-called “cultural exemption” provides Canada significant latitude in promoting, regulating and supporting its culture, including film and television, the performing arts, publishing and distribution, among others. The exemption applies to every chapter of the agreement, including digital services.

Direct and explicit financial and regulatory support to Canadian-only cultural products, performers, agencies, service providers, etc. inherently discriminates against foreign suppliers of cultural products – and, as such, does not conform to the spirit or intent of “free trade” disciplines (e.g. non-discriminatory market access and national treatment), including those embedded in the CUSMA.

Canadian cultural industries, and the regulatory and funding measures that sustain them, are under constant threat from U.S. suppliers. A shared border, shared language (outside of Quebecois and Indigenous languages), and economies of scale enjoyed by American producers, creates conditions for U.S. cultural exportation and Canadian culture displacement – among the many vulnerabilities of Canadian society exposed by U.S. free trade. This exemption must be closely guarded in the upcoming CUSMA review.    

• Inconsistent enforcement of forced labour prohibitions

CUSMA parties take inconsistent approaches to enforcing the prohibition on goods produced with forced labour. Canada has amended its Customs Tariff to prohibit imports of goods made wholly or partly with forced labour, aligning with similar powers held by U.S. Customs and Border Protection.

However, enforcement in Canada remains weak. The disparity between Canadian and U.S. enforcement practices undermines regional supply chain integrity and creates opportunities for exploitation.

• Insufficient funding for labour rights and technical assistance Initiatives

CUSMA parties are failing to meet their commitments to fund technical assistance projects that strengthen labour rights and enforcement capacity. Unifor’s four-year technical assistance project in Mexico achieved notable success, but its funding has expired, and the U.S. government has cut resources for its own Mexico Labor Program.

This funding for technical assistance work must be renewed. Beyond CUSMA’s current framework, Canada, the United States, and Mexico should establish a binding continental agreement aimed at improving labour rights across supply chains and building upon the progress of CUSMA’s labour chapter.

Conclusion

After five years of implementation, the CUSMA has failed to deliver the predictability and fairness promised to Canadian exporters and workers. Unilateral U.S. tariff actions—taken under the guise of national emergency and security authorities—have undermined both the spirit and the letter of CUSMA, nullifying the benefits Canada secured through difficult concessions. These measures have destabilized industries, weakened confidence in North American trade integration, and placed thousands of export-dependent jobs at risk. Canada cannot continue to accept an agreement that leaves its industrial economy vulnerable to arbitrary U.S. actions and political manipulation.

In preparing for CUSMA’s scheduled six-year review, Canada must pursue a firm, principled negotiating strategy grounded in reciprocity, fairness, and the protection of national sovereignty. Canadian negotiators must reject the notion that renewing the deal at any cost serves the national interest. Instead, they must insist that any renewed framework restore the foundational guarantees of tariff-free trade and enforceable dispute resolution. A credible agreement must eliminate asymmetrical enforcement of labour and human rights provisions, strengthen rules of origin to encourage regional production, and protect strategic sectors from capricious U.S. tariff escalation. Canada’s goal cannot simply be to preserve access—it must be to secure a durable, rules-based system that shields workers and industries from unilateral U.S. interventions.

Ultimately, Canada’s participation in CUSMA must be contingent on the agreement’s ability to protect good jobs, advance fair trade, and uphold Canada’s sovereignty. Federal negotiators must be prepared to walk away from a flawed deal if it fails to meet those tests. A renewed or reimagined continental trade framework should reflect the realities of shared production, mutual dependence, and the need for economic resilience. Above all, it must place working people—the true engine of North America’s prosperity—at the centre of its design and purpose.