Trump says Canada has nothing US needs as USMCA deadline edges closer

Donald Trump says he has no interest in renewing the trade agreement that has governed North American commerce for the past six years, telling reporters Wednesday he doesn't know that he will renew it and doesn't need anything Canada has to offer.

For Ottawa, the blunt dismissal lands at a moment when its ability to redirect exports elsewhere is far more constrained than its diversification ambitions suggest.

The Canada-US-Mexico Agreement faces a July 1 deadline by which all three nations must signal whether they want a 16-year renewal or commit to annual reviews.

Canada has made its preference clear. Trump has not, and his Wednesday remarks were pointed: "USMCA did one thing that I love. After six years, it comes up for renewal. I don't know that I'm going to renew it. Because to be honest with you, the United States does much better, OK? We don't need anything that Canada has. We don't need anything that Mexico has, but they need everything that we have."

Whether or not that assessment is economically accurate, the structural reality of Canadian trade offers Trump some leverage.

It’s all about physics

New research from the Fraser Institute, a Canadian non-partisan thinktank, applying the so-called gravity model of trade to Canada's export dependence, concludes that the concentration of Canadian goods flowing south is not primarily a product of the trade architecture between the two countries.

Instead, it is the result of physics with the US the world's largest economy at $23.8 trillion, sharing a land border with Canada, and roughly 70% of Canadians living within 100 kilometres of that border.

The so-called ‘gravity model’ holds that trade between two countries rises with their economic size and falls with the friction involved in conducting business across borders.

Canada and the US have spent decades eliminating that friction, through shared language and legal frameworks, deeply integrated supply chains in autos and industrial manufacturing, and more than CA$1.3 trillion in Canadian direct investment parked in the American economy. These ties don't unravel because a trade agreement lapses.

Energy flows

Canada has exported $127 billion worth of goods to the US so far this year, with energy the dominant category. The petroleum sector alone accounted for $197 billion in annual export value in 2024, and 95% of the country's oil exports flow south, a function of geography and the absence of meaningful alternative routes.

Trump's recurring complaint about the US trade deficit with Canada, which stands at $12 billion so far in 2026, is largely a product of those cheap energy flows. CTV News political commentator Tom Mulcair noted as much Wednesday, pointing out that Ottawa could theoretically end the surplus overnight by halting oil shipments, forcing American refiners onto the global market at higher prices.

The Fraser Institute analysis does not offer much comfort to those hoping trade diversification can substitute for whatever arrangement emerges from the CUSMA review.

Prime Minister Mark Carney's government has pledged to double non-US exports within a decade and has committed $10 billion to a Trade Diversification Corridor Fund. But the researchers find that trade agreements tend to shift patterns slowly, with full effects sometimes taking a decade to materialise, and they identify no meaningful uplift from such deals in energy and mining, the sectors that dominate Canadian merchandise exports.

The situation leaves Canada in a bind that is partly diplomatic and partly gravitational. Ontario Premier Doug Ford was in Washington this week pressing the case for tariff-free North American trade. Trade Minister Dominic LeBlanc last week sent a formal letter to his US and Mexican counterparts calling the agreement highly beneficial to each of the three countries. Trump, for his part, praised NAFTA's successor for one feature above all others: the right to walk away.