Margareta Dovgal: How Canada can win by giving Trump what he wants

US President Donald Trump (L) speaks with Canada's Prime Minister Mark Carney during a work lunch as part of the G7 summit, in Evian, eastern France, on June 16, 2026. Photo by EVELYN HOCKSTEIN /POOL/AFP via Getty Images

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Predictably, the Americans have declined to renew the Canada U.S. Mexico Agreement. As of Wednesday’s deadline, the trade deal enters potentially a decade of annual reviews, staying in force and expiring in 2036. That precarious uncertainty weighs heavily on the Canadian economy. A review decade is also a decade-long negotiation: nothing prevents the two countries from striking a new deal earlier, or conversely scrapping it with six months’ notice. In bargaining, Canada should concede where our own policies make us poorer, and hold the line only where it makes us richer.

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U.S. trade representatives blamed the agreement’s “shortcomings and our trade deficits with these countries.” By their figures, the goods deficit with Canada ran $46 billion last year, against $197 billion with Mexico. U.S. President Donald Trump frames it less delicately. “We don’t need anything that Canada has,” he said last month. “They need everything that we have. And they have to treat us better.”

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The substance of the grievance suggests the opposite. The goods deficit Trump resents exists because Americans buy enormous volumes of Canadian oil and gas.

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At least for now, Canada’s energy industry provides leverage in negotiations. Two decades plus of U.S. maneuvering have secured energy independence by volume, with America a net petroleum exporter since 2020. But shale, which they excel at producing, is a different input than what we offer. The refineries of the American Midwest are built to run on Canadian heavy crude, which contributes to American export prowess.

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The political fortunes of U.S. presidents operate in lockstep with domestic energy affordability. Trump rapidly backtracked on Iran when rising fuel prices spurred American consumer frustration. In Canada-U.S. trade, the same was shown in the 10 per cent tariff carve-out for Canadian energy, when, last year, other goods drew 25 per cent.

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We are just as dependent: energy is our most important export. The U.S. is our top customer.

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Roughly nine in 10 barrels exported go south. The Canadian government can’t forget that, nor that refinery slates and pipeline geography make Canadian heavy crude nearly irreplaceable in the Midwest, at least for now. Our presently strong hand will weaken as American re-sourcing efforts mature, particular if Venezuelan heavy oil production is restored to historic levels.

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American reliance on Canadian energy imports, and our economic reliance on exporting these commodities to them, is the real subtext for this as-yet unresolved trade dispute, but the concerns officially put forward by the U.S. are not nominal. Each demand needs to be parsed on its own merits, not merely through the short time-horizon lens of trade disputes.

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Does resisting it make Canada richer? Or does it feel good, but make Canada poorer?

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Auto manufacturing is an obvious example. Washington wants a 50 per cent U.S.-content floor on North American vehicles. Conceding here would be economically devastating for Canada, because the capital is already sunk and the supply chains are continental. The industry represents nearly $17 billion of our GDP. Such a floor would fracture integrated supply chains, raises costs and shifts production southward.