Former Canadian Ambassador Calls Washington’s CUSMA Demands a ‘Shakedown’

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The language of diplomacy is usually designed to lower the temperature. Derek Burney chose the opposite approach. The former Canadian ambassador to Washington said the demands confronting Ottawa ahead of the CUSMA review resemble a “shakedown,” arguing that Canada is being pressed to make one-sided concessions simply to enter a negotiation over an agreement the United States is already accused of disregarding.

The remark lands at a tense moment. The July 1 review is approaching, U.S. Ambassador Pete Hoekstra says the two countries are nowhere near a framework, and Washington has floated major changes affecting autos, agriculture and digital policy. Canada still wants a 16-year renewal, but Prime Minister Mark Carney is signalling that preserving the appearance of progress is not worth accepting a fundamentally weaker deal.

Why Burney’s Accusation Carries Unusual Weight

Burney is not an outside commentator discovering Canada-U.S. trade during the latest dispute. He served as Canada’s ambassador in Washington from 1989 to 1993, after working as Brian Mulroney’s chief of staff during the negotiation of the Canada-U.S. Free Trade Agreement. He was also in Washington during the negotiations that produced NAFTA. That history gives his criticism a sharper edge: it comes from someone whose career was closely tied to building the rules-based commercial relationship now under strain.

His wording was blunt. Burney distinguished a legitimate offer from a “shakedown” and said Canada had faced demands for unilateral concessions as the price of beginning a CUSMA renegotiation. He also asked why Ottawa should bargain with a country that, in his view, is violating the agreement already in force. The point was larger than tone. Traditional trade bargaining involves exchanges—market access for market access, or regulatory changes for tariff relief. Burney’s complaint is that Washington wants Canada to move first without clearly identifying what Canada would receive in return.

The Fight Began Before Formal Bargaining

Reports in April described Washington as seeking an “entry fee” before fully engaging Canada in formal talks. Four sources familiar with the matter said the United States wanted concessions up front, while former Quebec premier Jean Charest publicly characterized the approach as asking Canada to give ground before sitting down at the table. Carney said Donald Trump had not personally raised an entry fee with him, but he rejected the idea that Washington could dictate preconditions.

That distinction matters. An opening proposal can be tested, rejected or traded against another demand. A prerequisite changes the balance before bargaining starts. Canadian officials have instead argued for a comprehensive negotiation in which tariffs, market-access complaints and regulatory disputes are considered together. Trade Minister Dominic LeBlanc has resisted a sequence of isolated concessions that could be followed by new requests. Burney’s “shakedown” description captures the fear behind that position: once Ottawa pays to enter the room, the price of reaching an agreement may still remain unknown.

July 1 Is a Review, Not an Immediate Expiry Date

The looming date is important, but it is often misunderstood. CUSMA entered into force on July 1, 2020, with a 16-year term. Article 34.7 requires Canada, the United States and Mexico to conduct a joint review six years later. If all three confirm that they want the pact to continue, it receives a new 16-year term. Canada has formally recommended that outcome, arguing that renewal would preserve certainty for workers, consumers and businesses across the continent.

Failure to renew on July 1 would not suddenly restore tariffs on every cross-border shipment or erase CUSMA overnight. The agreement would remain in force while the countries conduct annual reviews, potentially continuing until its scheduled expiry in 2036. A party could separately invoke the withdrawal clause and leave with notice, but that is different from declining an extension at the six-year review. The immediate danger is therefore not a trade cliff. It is a decade of recurring uncertainty that could delay factory investments, supply contracts and hiring decisions.

Washington’s Public List Is Already Extensive

The United States has not published a single final package for Canada, but its official documents identify a broad range of grievances. U.S. trade officials have targeted Canada’s dairy tariff-rate quota system, the Online Streaming Act, the Online News Act, provincial restrictions involving American alcohol, procurement rules and customs procedures. The 2026 U.S. trade agenda also calls for stronger rules of origin and tougher measures against transshipment, offshoring and investment linked to non-market economies.

Some of these disputes predate the current confrontation. Washington has challenged Canada’s administration of dairy import quotas twice under CUSMA. The second dispute panel found in 2023 that the Canadian measures at issue were not inconsistent with the provisions cited by the United States, yet U.S. officials continued pressing for broader access. Digital policy has become another flashpoint because American platforms dominate the streaming and online advertising markets. Taken together, the demands reach beyond tariff schedules. They touch Canadian agricultural policy, cultural regulation, provincial purchasing and the country’s approach to Chinese investment.

The Auto Proposal Could Redraw North American Manufacturing

The most disruptive reported demand concerns vehicles. During U.S.-Mexico discussions, the Trump administration proposed raising the North American content threshold for preferential treatment from 75 per cent to 82 per cent, while requiring at least 50 per cent of a vehicle’s value to be produced in the United States. The proposal reportedly offered no way to count Canadian content toward that U.S.-specific minimum, even though Canadian plants and parts suppliers are deeply integrated into continental production.

That would change the logic of CUSMA’s auto rules. The existing system rewards regional production and requires 40 to 45 per cent of certain vehicle value to come from facilities paying higher wages, a rule that effectively benefits both Canada and the United States. A U.S.-only threshold would instead pressure automakers to shift components, investment or assembly south of the border. For communities such as Windsor, Oshawa and Alliston, the issue is not an abstract percentage. A sourcing formula written in Washington can influence where the next engine line, battery plant or supplier contract is placed.

Tariffs Have Weakened the Promise of Free Trade

CUSMA still provides meaningful protection. Canada’s 2026 economic update estimated that roughly 85 per cent of Canadian exports to the United States remained tariff-free because they complied with the agreement, leaving Canada with the lowest effective U.S. tariff rate among major American trading partners. That shield explains why preserving CUSMA matters even when political relations are poor. It also makes the remaining sectoral tariffs more conspicuous.

Canadian steel, aluminum, automobiles, lumber and other products have nevertheless faced U.S. duties imposed under authorities outside CUSMA’s normal tariff schedule. Washington has treated some of those measures as national-security or industrial-policy tools, while Ottawa has called them unjustified and inconsistent with the spirit or obligations of free trade. U.S. Trade Representative Jamieson Greer has indicated that some tariffs could remain even after a revised agreement. From Canada’s perspective, that creates a central contradiction: Washington is asking for stronger CUSMA commitments while reserving the right to keep major Canadian industries outside its tariff-free promise.

Canada Has Already Tested the Cost of Moving First

Ottawa’s handling of the Digital Services Tax has become the clearest warning against unilateral concessions. Canada planned a three per cent levy on certain Canadian-source revenues earned by large digital businesses. In June 2025, after Trump halted trade discussions and called the tax unacceptable, the Carney government suspended collection and announced that it would rescind the measure so negotiations could resume. The repeal later received royal assent in March 2026.

The concession produced an immediate procedural result: Washington said talks would restart. It did not produce lasting certainty. Months later, the countries remained divided, U.S. tariffs were still affecting major sectors, and reports emerged that Washington wanted additional concessions before formal CUSMA bargaining. Critics therefore see the tax reversal as evidence that giving something away early may only reset the negotiating table rather than secure a durable exchange. Canadian officials now have a strong political reason to demand simultaneous, measurable commitments—especially tariff relief—before surrendering another policy that cannot easily be restored.

The Economic Stakes Run in Both Directions

Canada is more exposed to the United States, but the relationship is not one-sided. U.S. government data show that two-way goods trade with Canada reached about US$719.5 billion in 2025, while services trade totalled roughly US$150.2 billion. Canada was the second-largest market for U.S. goods exports, and the United States ran a services surplus of nearly US$29 billion. Canadian demand supports American farms, factories, transport firms and professional-service providers far beyond the border states.

The broader North American market is even larger. LeBlanc’s formal renewal letter described a regional economy of more than 500 million consumers and roughly US$1.9 trillion in annual trilateral goods-and-services trade. American farm organizations have urged renewal because Canada and Mexico together buy tens of billions of dollars in U.S. agricultural products each year. Those figures do not erase the power imbalance, but they complicate claims that America has nothing to lose. A prolonged fight would not remain confined to Ottawa press conferences; costs would travel through grocery aisles, assembly lines and freight networks in all three countries.

Carney Is Keeping the Door Open Without Promising a Deal

Canada’s official position is deliberately constructive. LeBlanc’s June letter recommends another 16-year term, acknowledges that partners may propose improvements and says Ottawa will consider changes that benefit all three economies. At the same time, it identifies relief from sectoral tariffs as essential. That combination allows Canada to defend CUSMA without accepting that every U.S. complaint is valid or that renewal must come at any cost.

The practical strategy appears to be patience backed by preparation. Hoekstra has said the countries are not close to an interim framework, while Carney has argued that Canada could sign a bad deal quickly but will not do so. He has also suggested that the decisive moment may eventually require direct leader-to-leader bargaining with Trump. If no extension is agreed immediately, annual reviews provide more time, though at the cost of uncertainty. Burney’s warning therefore sets the test for Ottawa: remain willing to negotiate, but do not confuse access to the table with an outcome worth paying for.

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