Canada and US Set to Launch Formal Review of Free Trade Agreement in January 2026: What’s at Stake for Both Nations

Published on December 19, 2025

Canada and the United States are preparing to revisit their trade relationship with the formal launch of USMCA (United States-Mexico-Canada Agreement) discussions in January 2026. This is the first major review of the trade pact, and it holds significant implications for both nations, which have shared economic interests for decades.

The announcement came from Canadian Prime Minister Mark Carney’s office as the country’s Trade Minister, Dominic LeBlanc, prepares to meet with U.S. counterparts to discuss potential amendments and adjustments to the current agreement. This formal dialogue follows the clause in the USMCA that allows for a review every six years to assess the pact’s impact on trade dynamics. The 2026 review will determine whether adjustments are needed to foster continued growth and address any trade irritants that have arisen since the agreement was signed.

Canada’s Growing Trade with the U.S. and the Need for Stronger Policy Leadership

The U.S.-Canada trade relationship is one of the largest in the world, with Canada being the U.S.’s largest trading partner and vice versa. Over $3.6 billion Canadian dollars worth of goods and services cross the U.S.-Canada border every day, making this relationship integral to the economies of both nations. As Canada is one of the U.S.’s top suppliers of energy, steel, aluminum, and critical minerals, the stakes are high for both countries to maintain and improve this partnership.

However, Prime Minister Carney has emphasized that Canada’s growing energy market—particularly in critical minerals like lithium, uranium, and cobalt—is now part of a broader global conversation. As U.S. demand for these minerals rises due to national security priorities, Canada’s stance on exports may shift, and the upcoming discussions could set the stage for a new phase in the bilateral relationship. While U.S. access to Canadian resources is not assured, Carney sees this as a critical discussion to align both countries’ long-term economic strategies.

The USMCA Review: Key Issues for 2026

The upcoming 2026 USMCA review will focus on several contentious issues, with particular emphasis on tariffs, policy on dairy products, and Canadian rules on alcohol and digital services. U.S. Trade Representative Jamieson Greer recently indicated that several aspects of the agreement will be under scrutiny, with a focus on addressing specific trade barriers. The United States has raised concerns over Canada’s dairy protections and digital service regulations, both of which are critical to maintaining balance in the agreement. Additionally, tariffs, particularly in sectors like steel, aluminum, and automotive parts, are expected to be a major focus. These industries have faced considerable tensions, leading to fluctuating import costs and trade uncertainty.

Both Canada and the U.S. have a shared interest in strengthening the trade pact, but finding common ground on these thorny issues will require delicate diplomacy and flexibility. U.S. officials have noted that while there’s a willingness to renegotiate certain aspects, it remains important to address sensitive sectors to avoid escalating tensions.

The Role of Canadian Government Leadership in Trade Discussions

As trade negotiations continue, Canada’s government leadership plays a pivotal role in guiding the discussions and ensuring that the country’s interests are well-represented. Carney has emphasized that governments need to actively support industries by reducing trade barriers and encouraging investment in both nations. The upcoming talks will be essential in shaping Canada’s economic future, particularly in its resource extraction industries and its global trade relationships.

Canada’s trade dependence makes these discussions crucial. With 75% of its exports going to the U.S., the stability of this trade relationship is key to its economic growth and market access. However, as both nations move forward, they will need to consider how to adjust trade policies that reflect the modern global economy, with renewable energy, technology, and green resources playing an increasingly central role.

The Stakes for Both Nations: How the USMCA Review Could Shape 2026 and Beyond

The 2026 USMCA review represents more than just a chance to address current issues—it’s an opportunity to strengthen the long-term economic partnership between the U.S. and Canada. The success of these negotiations will have lasting implications for industries across both nations. From energy to agriculture to digital services, the upcoming discussions will set the tone for future trade relations, ensuring both countries stay competitive on the global stage.

Moreover, global challenges—including rising demand for critical minerals, sustainable energy, and trade security—are likely to be key drivers of the 2026 negotiations. Both governments are expected to seek solutions that not only benefit their own domestic markets but also create new opportunities for mutual growth. With Canada’s evolving role as a critical partner in securing resources, its role in global markets will only continue to grow.

Conclusion: A Crucial Moment for US-Canada Trade Relations

The January 2026 USMCA review marks a critical point in U.S.-Canada relations, especially as both nations seek to evolve with the changing global landscape. These discussions, while driven by economic factors such as tariffs and trade regulations, are also pivotal for shaping the future of North American trade partnerships. With careful negotiation and collaboration, Canada and the U.S. can strengthen their bond and navigate a more connected and sustainable future.

As Canada’s government takes a leading role in these discussions, it is imperative that both sides approach the negotiations with the flexibility and vision needed to secure the long-term prosperity of both nations. By balancing economic priorities with sustainable growth, the USMCA review can lay the groundwork for a new era of cooperation that benefits all industries involved.