The future of North American trade is once again in the spotlight as the United States and Canada gear up for a contentious review of their free trade agreement, with dairy, digital services, and liquor sales at the heart of the dispute. After months of simmering tensions, Canadian Prime Minister Mark Carney announced on December 18, 2025, that formal negotiations with the United States will begin in January 2026 to review the Canada-U.S.-Mexico Agreement (CUSMA), also known as USMCA. The announcement follows a series of sharp demands delivered by U.S. Trade Representative Jamieson Greer before a Congressional committee just a day earlier, laying bare the American wish list for keeping the trade pact alive.
At the core of U.S. grievances is Canada’s tightly controlled dairy supply management system. This decades-old framework sets production quotas and limits imports, ensuring stable prices for Canadian farmers but driving up costs for consumers and, according to U.S. officials, locking American dairy out of the market. President Donald Trump has made no secret of his distaste for the system, repeatedly accusing Canada of imposing “extraordinary tariffs to our dairy farmers – up to 400 percent.” While some U.S. dairy products are allowed into Canada tariff-free up to certain thresholds, those limits have never been reached, leaving American exporters feeling boxed out. Despite Canada importing $1.1 billion in U.S. dairy goods in 2024, Greer told Congress that “the framework as it stands unfairly restricts market access for U.S. dairy products in Canada.”
The U.S. is also pressing Canada to curb what it sees as unfair export practices, specifically accusing Canada of dumping nonfat milk solids on global markets at artificially low prices. This, American negotiators argue, undercuts U.S. producers and distorts international competition. The issue isn’t new—during the last USMCA review under Trump’s first term, Canada conceded by granting American dairy greater access at reduced or zero tariffs, despite initially insisting its supply management system was non-negotiable. This time around, Prime Minister Carney remains adamant: “We continue to stand by that,” he said, referring to Canada’s intention to protect its agricultural supply management. Yet, as history shows, the hard line may soften as talks progress.
Dairy isn’t the only sticking point. The Americans have their sights set on Canada’s digital policy landscape, particularly two laws passed in recent years. The 2023 Online Streaming Act, introduced under former Prime Minister Justin Trudeau, obliges foreign platforms like Netflix and Spotify to financially support Canadian content and promote it through their algorithms. Canada’s broadcast regulator now has the authority to levy penalties on companies that fall short. The Online News Act, another Trudeau-era law, requires tech giants such as Meta and Google to pay Canadian news outlets for content appearing on their platforms. The law’s implementation prompted Meta to block news access for Canadian users on Facebook and Instagram, sparking widespread debate over its impact.
Greer did not mince words when addressing Congress: he labeled the Online Streaming Act as legislation that “discriminates against U.S. tech and media firms.” The U.S. wants these policies revised, though specific remedies have yet to be publicly outlined. Canadian officials, for their part, argue the laws are designed to protect and promote domestic culture and journalism “to the benefit of future generations of artists and creators in Canada.” The digital divide between the two countries is shaping up to be one of the thorniest issues in the upcoming talks.
Trade irritants extend well beyond dairy and digital. The U.S. is pushing for the restoration of American liquor products to Canadian provincial store shelves, which were removed en masse in retaliation for tariffs imposed by President Trump after his 2024 re-election. Ontario’s Premier Doug Ford, speaking alongside Carney, made his position clear: “I’m not going to sit back and roll over. I’m going to continue fighting to make sure we get a fair deal with the U.S.” Ford has vowed to maintain the boycott until a new tariff arrangement or renegotiated USMCA is in place. The liquor ban has hit American producers hard, with a significant drop in sales north of the border. Greer told Congress that the U.S. expects American liquor to return to Canadian shelves as a condition for extending the trade pact.
Other American grievances include what Greer described as “discriminatory procurement measures” in Ontario, Quebec, and British Columbia, which allegedly disadvantage U.S. suppliers in government contracts. Complicated customs registration procedures and a simmering electricity dispute between Montana and Alberta have also made the list. The U.S. claims Alberta’s grid operator unfairly blocks Montana-based electricity providers, despite Alberta remaining a net importer of Montana electricity. Alberta’s Utilities Minister Nathan Neudorf pushed back, stating, “It’s a long-standing issue between the two neighbours, but Alberta is committed to its trade obligations and relationship with Montana.”
Prime Minister Carney, meanwhile, is eager to highlight the mutual benefits of cross-border cooperation. He told reporters that Canada and the U.S. stand to gain by pooling resources in key sectors such as auto, steel, aluminum, and forest products. “We can make an immediate difference to affordability in the United States to the benefit, yes, of Canadian workers, but also to American consumers,” Carney said, referencing the potential for a forest products agreement that could help address housing affordability challenges in the U.S.
Despite the heated rhetoric, both sides seem to recognize the high stakes. The USMCA underpins more than $1 trillion in annual trade among the U.S., Canada, and Mexico. While President Trump has threatened to withdraw from the agreement entirely—most recently in an October 2025 spat over an Ontario anti-tariff advertisement—the economic fallout of such a move would be severe for all parties. Carney and his provincial counterparts, including Ford, are keenly aware of the need to defend Canadian interests while keeping the door open to compromise. “We will enter those discussions on the review of CUSMA in that spirit,” Carney said.
For now, the stage is set for a high-stakes negotiation that will test the resolve—and flexibility—of both governments. With formal talks scheduled to begin in January, the coming months will reveal whether North America’s trade giants can find common ground, or if old disputes will push the continent’s economic partnership to the brink.
As the dust settles, one thing is clear: the future of North American trade hangs in the balance, and both sides have much to lose—and much to gain—if they can bridge their differences.
