Canada and the United States are talking again. The agreement runs to 2036.
A 50 percent tariff lands on 19 August. Canadian negotiators have been in Washington twice in two weeks. And the trade agreement widely believed to have expired on 1 July is still in force, with another decade to run.
Canada-US Trade Minister Dominic LeBlanc and Canada's chief trade negotiator Janice Charette met United States Trade Representative Jamieson Greer in Washington on Thursday 6 August. It was the second such meeting in two weeks. CBC reported that the meeting was scheduled for thirty minutes and that LeBlanc was in the trade office for an hour and a half, and that two sources with knowledge of the plans said he would return to Washington next week.
That is the entire measured content of the day: three meetings, one of them overrunning by an hour. What follows is what those meetings are being held against.
What happens on 19 August
On 20 July the President signed three proclamations under Section 338 of the Tariff Act of 1930. Each imposes an additional 50 percent tariff on a different set of Canadian goods. The three cover alcoholic beverages, motor vehicles and dairy, and the White House describes the covered products as ranging from wine to hockey sticks to cement. The measures take effect thirty days after signing, which is 19 August.
Two provisions matter more than the rate.
The first is that the tariffs apply, in the White House's words, to all covered goods regardless of whether a good originates under the United States-Mexico-Canada Agreement. The trade agreement's preference does not exempt anything on the list.
The second is what is not on the list.
Confirmed Quoted directly from the White House fact sheet of 20 July 2026. Address in full below.
Energy is carved out. So is potash. In 2025 crude oil alone accounted for 69 percent of the value of all energy traded between the two countries, on figures published by the US Energy Information Administration. The measure does not touch it.
The agreement did not end on 1 July
This is the part that is most widely misunderstood, and the treaty text settles it in a few sentences.
CUSMA entered into force on 1 July 2020. Article 34.7 paragraph 1 states that the agreement terminates sixteen years after entry into force unless each party confirms it wishes to continue for a new sixteen-year term. Sixteen years from 1 July 2020 is 1 July 2036.
Paragraph 2 requires the Commission to meet on the sixth anniversary for a joint review. That date was 1 July 2026. Paragraph 3 requires each party to confirm in writing, through its head of government, whether it wishes to extend.
At that review the United States did not confirm. Canada and Mexico did. The White House states the American position in its own fact sheet: the United States “did not agree to renew the United States-Mexico-Canada Agreement in its current form, because the deal is not sufficiently beneficial for the United States.”
Paragraph 4 governs what happens next, and it does not say the agreement ends.
So the position today is this. The agreement remains in force. The review becomes annual instead of every six years. The sixteen-year extension is not lost and can be taken at any point before 2036 by written confirmation from the three heads of government. Nothing about rules of origin, tariff preferences or dispute settlement changed on 1 July.
Leaving is a separate act with its own provision. Article 34.6 permits a party to withdraw on written notice, with the withdrawal taking effect six months after that notice is given. The same article adds a sentence that is rarely quoted: if one party withdraws, the agreement remains in force for the other two.
What each side is actually holding
The numbers below are annual figures for 2025, published by the Canada Energy Regulator on 27 May 2026 and by the US Energy Information Administration on 29 July 2026. Where the two agencies measure the same thing they agree.
| Canada's share of United States energy imports, 2025 | Share |
|---|---|
| Natural gas | close to 100% |
| Natural gas liquids | 97.9% |
| Electricity | 81.3% |
| Crude oil | 63.4% |
| Refined petroleum products | 24.9% |
Measured Canada Energy Regulator, Market Snapshot, released 27 May 2026, using EIA import series. These are shares of what the United States imports. They are not shares of what it uses.
US crude oil imports from Canada averaged 3.9 million barrels a day in 2025. The American refining complex is built around that grade: EIA states that relatively complex US refineries tend to prefer heavy crude oils such as those Canada produces, and that in the first half of 2022, 69 percent of US crude imports had an API gravity of 30.0 or lower, which is the heavy category.
The dependence runs the other way as well, and on some measures runs harder.
| Canada's exposure to the United States, 2025 | Share |
|---|---|
| Of Canada's crude oil exports, the share going to the US | 90.1% |
| Of all Canadian hydrocarbon exports, the share going to the US | 90.8% |
| Hydrocarbon exports to the US as a share of Canada's total goods exports to the world | 20.2% |
| Of Canada's electricity trade, the share conducted with the US | 100% |
Measured Canada Energy Regulator, same release. Canada exported hydrocarbons to 112 countries in 2025 and the United States took 90.8 percent of the total. Canada trades electricity with no other country at all.
The number that gets quoted, and the number that decides anything
Canada supplies 81.3 percent of the electricity the United States imports. That figure is correct, and on its own it is close to meaningless.
In 2025 Canada exported 32.7 terawatt hours of electricity to the United States and imported 22.1 terawatt hours back, leaving net Canadian exports of about 10.6 terawatt hours. Total US electricity generation in 2025 was about 4,430 terawatt hours, a record, on EIA figures.
| Canadian electricity into the US, 2025 | Terawatt hours | Share of US generation |
|---|---|---|
| Gross exports to the US | 32.7 | about 0.74% |
| Net of what Canada imported back | 10.6 | about 0.24% |
Measured Trade volumes from the Canada Energy Regulator. US generation from EIA, 2025. The percentages are our arithmetic on those two published figures and can be reproduced from them.
Both numbers are true and they describe different worlds. Eighty-one percent of imports. Three quarters of one percent of supply. The first is the figure that circulates. The second is the one that determines what happens if the flow stops.
The Canada Energy Regulator describes the 86 international power lines as critical to electricity system reliability “in Canadian provinces and U.S. states,” in that order and in both directions.
The national figure is the wrong instrument for the question
A national average conceals a distribution, and in this case the distribution is the whole point. The CER notes that Ontario and Quebec together produce over half of Canada's electricity and account for over half of the exports. Those exports do not arrive evenly across a continent. They arrive in particular states, over particular lines.
One of those lines opened two months ago.
| Champlain Hudson Power Express | |
|---|---|
| Commercial deliveries began | 1 June 2026 |
| Capacity | 1,250 MW |
| Route | 339 miles, Canadian border to a converter station in Queens, New York |
| Annual delivery, as stated at completion | 10.4 TWh |
| Share of New York City electricity, as stated | close to 20% |
| Supply contract | Hydro-Quebec, 25 years |
Confirmed Completion announced by NYSERDA, 16 June 2026. The line is the longest fully buried transmission line in North America, built and owned by Transmission Developers Inc. The capacity of 1,250 MW and the dates are facts. The 10.4 terawatt hours and the New York City share are figures stated at completion, not measurements, since the line has been in commercial operation for about two months and no annual delivery has yet occurred.
Which means the 2025 figures above already understate the flow. Canada exported 32.7 terawatt hours of electricity to the United States in the whole of 2025. This single line is stated to carry 10.4 terawatt hours a year and it did not begin delivering until 1 June 2026. On the stated figure it is, on its own, close to a third again on top of the entire 2025 total.
Every share we calculated above is therefore a floor, not a current reading. The 2026 annual figures do not exist yet. We are reporting the most recent complete year and saying plainly that it is behind the infrastructure.
The lever was actually pulled once, and it lasted about a day
What happens if Canadian electricity stops is usually discussed as a hypothetical. It does not have to be. On 10 March 2025 the Government of Ontario applied a 25 percent surcharge on electricity exported to New York, Michigan and Minnesota, a fee of US$7 per megawatt hour. The Government of Ontario stated that it was answering United States tariffs.
| Ontario electricity export surcharge, 2025 | |
|---|---|
| In effect from | 10 March 2025 |
| Rate | 25%, US$7 per MWh |
| States affected | New York, Michigan, Minnesota |
| Revenue collected, one day | about $260,000 |
| Effect on an affected American bill, as estimated by the Premier of Ontario | about US$69 a month |
| Suspended | about 3 p.m. eastern, 11 March 2025 |
Confirmed Reported across multiple outlets on 10 and 11 March 2025. The suspension was announced to allow officials from both governments to meet in Washington later that week. The $69 figure is Premier Doug Ford's own estimate and we have not independently verified it.
The measure ran for roughly one day. No grid effect was observed in that window because there was not time for one, and the surcharge was a price on exports rather than a stoppage of them. What it demonstrates is narrower and more useful than any projection: the lever exists, a Canadian government has reached for it, and it was released within about twenty four hours in exchange for a meeting in Washington.
That is the same exchange the opening of this article describes, sixteen months later.
The proclamation called Motor Vehicles does not tariff motor vehicles
The three proclamations are named for the Canadian measures they answer, not for the goods they tax. The motor vehicles proclamation states its own limit in paragraph 2 of the operative text.
Automobiles and automobile parts are already subject to Section 232 duties, under a proclamation of 26 March 2025, with medium and heavy duty vehicles, their parts and buses added on 17 October 2025. The White House lists trucks and automobiles among the goods it has placed under Section 232.
So the 50 percent duty answering Canada's treatment of American cars falls on other goods. The covered lines are in Annex II of the proclamation, which we have not read. The White House's own summary describes the three proclamations together as covering products “ranging from wine to hockey sticks to cement.”
What Canada actually did, in the American document
The proclamation sets out the Canadian measure it is answering in more detail than most reporting has carried. Since 9 April 2025, under the United States Surtax Order (Motor Vehicles 2025), SOR/2025-118, Canada has applied:
| Canadian measure on US motor vehicles | Treatment |
|---|---|
| US vehicles that do not qualify for CUSMA duty-free treatment | 25% tariff |
| US vehicles that do qualify for CUSMA duty-free treatment | 25% on the value of all content not originating in Canada or Mexico, up to 85% of vehicle value |
| US vehicles qualifying under CUSMA | Tariff-rate quota per automaker, above which the rates above apply |
Confirmed Stated in the proclamation of 20 July 2026, which cites Canada Customs Notice 25-15. The proclamation states that Canada does not publicly disclose the company-specific in-quota quantities, and that Canada reduced quotas for US companies that moved manufacturing out of Canada.
The United States government's own figures on the effect: American motor vehicle exports to Canada fell approximately 22 percent between April 2025 and March 2026 against the same period a year earlier, from about $25.9 billion to about $20.3 billion. Over a comparable period Canadian imports of Mexican motor vehicles rose about 23.6 percent, and imports from Japan, Korea and Germany rose between about 10.1 and 13.5 percent. Canadian vehicle imports from countries other than the United States rose about $2.85 billion in total, with Mexico accounting for close to $2 billion of it.
Unconfirmed These are the tariffing government's figures in its own proclamation. We have not tested them against Statistics Canada.
How many times a part crosses the border, and why three sources give three answers
The integration of North American vehicle manufacturing is usually conveyed by a single number, and there is no single number. There are at least three, they come from different kinds of source, and they are not measuring the same thing.
| Claim | Source | What it measures |
|---|---|---|
| As many as 8 crossings of Canadian, US and Mexican borders before final assembly | Canadian Vehicle Manufacturers' Association | A stated maximum, from an industry association |
| 6 crossings of the Canada-US border on average before final assembly | Mark Carney, on X, March 2025 | A stated average, from a political figure |
| 4 crossings on the way to a car | NBC News | One specific part, traced |
Unconfirmed None of these is a government statistic and we could not find one. A maximum, an average and a single traced component are three different quantities, and quoting any one of them as “the” figure would be wrong. We report the range and who said what.
What is not in dispute in any of the three is direction of travel: components move back and forth across national borders repeatedly before a finished vehicle exists, and a duty applied at a border is applied at each crossing it touches.
Two things that cut against the simple version
American refineries have been running progressively lighter crude for two decades. EIA reports that the average API gravity of crude oil inputs into US refineries was 30.2 degrees in 2005 and 33.0 degrees in the first half of 2022. Higher API means lighter. The configuration argument is real, and the slate has still been moving.
And Canadian crude is already going elsewhere. US crude oil imports from Canada fell 4 percent in 2025, and EIA attributes that partly to increased use of the Trans Mountain Expansion pipeline, which carries Canadian crude to the Pacific coast for export, and increasingly to Asia.
Both sides are holding something the other cannot quickly replace
What follows is reasoning, not measurement. Every fact underneath it is sourced above. The conclusion drawn from those facts is ours, it is analysis rather than data, and we are labelling it so you can weigh it differently from the numbers.
This is not a negotiation between a strong party and a collapsing one. It is two economies that were deliberately built into each other over sixty years, and the strongest evidence for that is not our argument. It is the instruments themselves.
The 19 August measures exempt energy. They exempt potash. They exempt everything already under Section 232, which is why the proclamation answering Canadian treatment of American cars does not fall on cars or car parts. A 50 percent duty was reached for, and then routed around every point where the two economies are actually fused. What is left is wine, hockey sticks and cement.
Read the same way from the other direction, Canada sends 90.8 percent of its hydrocarbon exports to one customer, conducts 100 percent of its electricity trade with that same customer, and depends on that trade for 20.2 percent of everything it sells to the world. Those are not the numbers of a country that can walk away either.
Neither side is bluffing from an empty hand, and neither can play its best card without paying for it. That is why the meetings run ninety minutes instead of thirty, and it is the reason this negotiation looks nothing like one between a superpower and a supplicant.
The scale of the thing is worth stating once. The two countries share 8,891 kilometres, or 5,525 miles, of boundary, the longest international border in the world between one pair of countries. It has been surveyed and maintained jointly since 1908 by the International Boundary Commission, a binational body made permanent by treaty in 1925, which keeps a cleared three metre vista along its length and reports every year to both governments. A century of joint administration is not a thing either side can tariff its way out of.
There is no trophy available here, and that is the point. Whatever comes out of the meetings, the same 86 power lines cross the same border, the same pipelines run south, and the same components cross and recross before a vehicle exists. Neither economy gets to win this in any sense that leaves it better off with the other one damaged.
What would show this reasoning to be wrong. If the 19 August measures are extended to energy or to Section 232 goods, or if either side accepts a settlement that plainly costs it more than walking away, the reading above fails. We will say so if that happens.
What the tariffing government says about why
The following are claims made by the United States government in the document imposing the tariffs. We report them as its stated case. We have not tested any of them against Statistics Canada or the Canadian International Merchandise Trade database. They are not our findings.
The White House states that Canadian imports of US motor vehicles fell by approximately 22 percent, or $5.6 billion, between April 2025 and March 2026 against the same period a year earlier; that all but two Canadian provinces and territories halted the purchase, distribution or retailing of US alcoholic beverages; that Canadian imports of US alcoholic beverages fell about 81 percent, or $582 million, between March 2025 and February 2026; and that Canadian tariff-rate quotas on US cheese are more restrictive than those applied to the European Union.
The same document states that over the past year and a half only two countries have retaliated against US tariffs rather than negotiate: China and Canada, and that the tariffs have produced 18 deals with other trading partners.
What we did not measure
This article contains no forecast and no assessment of who is in the stronger position.
We have not measured employment in any affected sector, provincial or state level electricity exposure, refinery distillate yields by crude grade, the availability or cost of alternative heavy crude supply, the price effect of the 19 August measures on any good, or the content of any negotiation. We hold no source on what was discussed in Washington on Thursday beyond the fact that a meeting occurred and how long it lasted.
We have read the motor vehicles proclamation but not its Annex II, which carries the actual list of covered tariff lines, and we have read neither the alcoholic beverages nor the dairy proclamation. Reading all three annexes is the next piece of source work. Where a summary and the legal text differ, the legal text governs.
On the auto supply chain we have the crossing claims and nothing underneath them. We could find no government statistic for how many times a component crosses a border, no measurement of Canadian content in a finished North American vehicle, and no sourced figure for how long it takes to stand up a new precision parts plant on a just-in-time schedule. That last one matters, because a supply chain that can be rebuilt in months and one that takes years are different arguments entirely, and we cannot currently tell you which this is.
What would change this
Three dated things are scheduled or reported. The Section 338 tariffs take effect on 19 August. LeBlanc was reported by CBC to be returning to Washington next week. And under Article 34.7 paragraph 4 the next joint review falls due within a year of 1 July 2026, with the sixteen-year extension available before then on written confirmation by three heads of government.
Sources and verification
Addresses below are printed in full so you can copy one and check us. We do not link out.
The Washington meeting. CBC News, “Top Canadian, U.S. trade officials meet in Washington as 50% tariffs loom,” Darren Major, 6 August 2026. Facts stated in our own words, not republished. Confirmed https://www.cbc.ca/news/politics/canada-u-s-trade-negotiations-9.7298137
The tariff measures and every quotation attributed to the White House. Fact Sheet: President Donald J. Trump Imposes Additional Tariffs on Canada, 20 July 2026. US federal work. Authoritative on what the measure does, an interested party on why. Confirmed https://www.whitehouse.gov/fact-sheets/2026/07/fact-sheet-president-donald-j-trump-imposes-additional-tariffs-on-canada/
The motor vehicles proclamation, quoted verbatim, and every figure on Canada's surtax order and on US vehicle exports. Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States with Respect to Motor Vehicles, 20 July 2026. Annex I and Annex II are separate PDFs and we have not read them. Confirmed https://www.whitehouse.gov/presidential-actions/2026/07/imposing-additional-duties-to-offset-canadian-discrimination-against-the-commerce-of-the-united-states-with-respect-to-motor-vehicles/
The border crossing claims, all three. The maximum of eight is attributed to the Canadian Vehicle Manufacturers' Association, an industry body. The average of six was stated by Mark Carney on X in March 2025. The single traced component is NBC News. We found no government source for any of them, and none of them is one. Unconfirmed
Articles 34.6 and 34.7, quoted verbatim. Canada-United States-Mexico Agreement, Chapter 34, Final Provisions, Global Affairs Canada consolidation. Global Affairs notes this consolidation is for information and directs readers to the CUSMA Secretariat for the authoritative text. Confirmed https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cusma-aceum/text-texte/34.aspx?lang=eng
All Canadian energy trade shares and volumes. Canada Energy Regulator, Market Snapshot: Overview of 2025 Canada-U.S. Energy Trade, released 27 May 2026, data extracted March 2026. Measured https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/market-snapshots/2026/market-snapshot-overview-of-2025-canada-us-energy-trade.html
Energy trade value, the 69 percent crude share, and the Trans Mountain attribution. US Energy Information Administration, 29 July 2026. Measured https://www.eia.gov/todayinenergy/detail.php?id=67904
US electricity generation in 2025. US Energy Information Administration. Measured https://www.eia.gov/todayinenergy/detail.php?id=67284
Champlain Hudson Power Express. New York State Energy Research and Development Authority, completion announcement, 16 June 2026. Confirmed https://www.nyserda.ny.gov/About/Newsroom/2026-Announcements/2026-06-16-Governor-Hochul-Celebrates-Completion-Of-Champlain-Hudson-Power-Express-Project
The Ontario electricity export surcharge of March 2025. Reported 10 and 11 March 2025 by Utility Dive, CBS News and others. The rate, the states, the one-day revenue and the suspension time are consistent across outlets. The monthly household estimate is the Premier of Ontario's own and is not independently verified. Confirmed https://www.utilitydive.com/news/ontario-tariff-power-electricity-exports-isone-nyiso/742124/
Crude density and the refinery slate series. US Energy Information Administration, 11 October 2022. The API figures are from 2022 and are quoted with that date. Measured https://www.eia.gov/todayinenergy/detail.php?id=54199
The boundary length and the International Boundary Commission. International Boundary Commission, a binational body created 1908 and made permanent by treaty in 1925. Confirmed https://www.internationalboundarycommission.org/en/about/the-boundary.php
All percentages of US generation are our own arithmetic on the CER and EIA figures above and can be reproduced from them.
Not measured here. The three proclamations in their Federal Register text, employment effects, provincial or state level electricity exposure, refinery distillate yields, alternative heavy crude supply, any price effect of the 19 August measures, and the content of any negotiation.