Trump Calls CUSMA A "Good Deal," But Threatens Termination

Kenji Nakamura

4 min read

Post on May 08, 2025

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Trump's Shifting Stance on CUSMA

Donald Trump's pronouncements on CUSMA have been notoriously inconsistent. While he occasionally celebrated the agreement as a triumph, boasting of its potential for job creation and economic growth, he equally often threatened to scrap it entirely. This volatility raises questions about his true intentions and the long-term stability of the deal.

• Positive Statements: Trump frequently touted CUSMA as a replacement for the outdated NAFTA, emphasizing its benefits for American workers and businesses. He often highlighted the renegotiated terms as fairer to the United States, securing better access to markets and protecting American industries. For example, he might state (hypothetically) "CUSMA is a tremendous win for America. It's going to bring back jobs and boost our economy."

• Threats of Termination: However, Trump also issued numerous threats to withdraw from CUSMA, often linking these threats to specific disputes with Canada or Mexico. These disputes frequently revolved around issues like dairy tariffs, auto manufacturing regulations, and enforcement mechanisms within the agreement. He may have stated (hypothetically) "If they don't play ball, we'll terminate CUSMA. We need a better deal for the American people."

• Motivations: Several factors likely contributed to Trump's fluctuating opinions. Political posturing, using the threat of termination as a bargaining chip in negotiations, and shifting domestic policy priorities could all have played a role. The unpredictable nature of his pronouncements kept both trading partners on edge.

The Economic Impacts of CUSMA (and Potential Termination)

CUSMA, despite its challenges, has demonstrable economic benefits for all three signatory nations. The agreement facilitated smoother cross-border trade, leading to increased economic integration and growth.

• Positive Economic Indicators: Increased trade volumes in key sectors, like agriculture and automotive manufacturing, followed the agreement's implementation, demonstrating positive economic interdependence. Data on GDP growth and job creation (though not solely attributable to CUSMA) might show a correlation.

• Negative Economic Predictions: Termination, however, would likely have severe negative consequences. Disruption to supply chains, trade diversion to other markets, and increased costs for businesses would negatively impact economic growth across all three countries. Specific industries, particularly the auto sector deeply integrated across the three nations, would face significant challenges.

• Industry-Specific Impacts: The automotive industry, for instance, relies heavily on integrated production across North America. Termination could lead to plant closures, job losses, and a rise in vehicle prices for consumers. Similarly, the agricultural sector, which benefits from streamlined cross-border trade, could experience major disruptions.

Political Ramifications of CUSMA Termination

The political ramifications of a CUSMA termination extend far beyond economic considerations. It would severely damage US relations with both Canada and Mexico, undermining years of built-up trust and cooperation.

• Damaged Relationships: A unilateral withdrawal would signal a disregard for international agreements and damage America's reputation as a reliable trading partner. This could further strain already-tense relationships between the US and its northern and southern neighbors.

• Global Trade Implications: The move would also raise concerns about the stability of other international trade agreements and the reliability of the US as a negotiating partner in future deals. It could embolden other countries to adopt protectionist policies, leading to a more fragmented global trade system.

• Domestic Political Repercussions: For the Trump administration, termination would likely have faced strong domestic political backlash, depending on the prevailing economic climate and public perception of the decision.

The Future of CUSMA

While Trump's threats of termination loomed large, the USMCA, to date, remains in effect. The agreement’s future, however, is not entirely secure, and ongoing discussions and potential amendments continue to shape its trajectory.

• Current State: The agreement is currently operational, with ongoing efforts to address outstanding concerns and resolve disputes through established mechanisms.

• Potential Future Scenarios: Several scenarios are possible, including continued implementation, major amendments to address outstanding concerns, or, less likely, a complete withdrawal by one or more of the participating countries.

• Ongoing Efforts: Negotiations and consultations between the US, Canada, and Mexico are ongoing, aiming to ensure the agreement's long-term viability and address any emerging challenges.

CUSMA's Uncertain Future: Understanding Trump's Legacy

Trump's inconsistent approach to CUSMA highlighted the unpredictable nature of trade policy under his administration. His threats to terminate the agreement, while ultimately not realized, had significant economic and political repercussions, impacting relationships, trade flows, and investor confidence. The USMCA remains a cornerstone of North American economic integration, and understanding the ongoing debate surrounding its future is crucial. Stay informed about the latest developments concerning the Trump administration’s stance on CUSMA, the future of the USMCA agreement, and the implications of CUSMA termination. Participate in discussions and advocate for policies that promote stability and cooperation in North American trade.