U.S. Trade Representative Jamieson Greer attends a joint press conference during the EU trade ministers' meeting at the European Council building in Brussels on Nov. 24, 2025.Omar Havana/The Associated Press
Drew Fagan is a professor at the University of Toronto and visiting professor at Yale University. He is a member of the Expert Group on Canada-U.S. Relations and a former head of policy planning at what is now Global Affairs Canada.
U.S. Trade Representative Jamieson Greer is reputed to have the toughest job in Washington: translating President Donald Trump’s often incoherent views on trade into coherent policy.
But Mr. Trump’s weekend threat of 100-per-cent tariffs against Canada seems to be an exclamation point to Mr. Greer’s latest idea on what should become of the United States-Mexico-Canada Agreement (USMCA).
Mr. Greer has broached the idea of something approaching a North American customs union. That would go beyond free trade. The partners would apply a common trade policy to other countries, even globally.
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Mr. Greer has also spoken about turning the USMCA into separate U.S. agreements with Canada and Mexico. This would be a limited blow to Canada. But a customs union could be much more damaging, forcing Prime Minister Mark Carney to sometimes choose between trade with the United States and trade elsewhere.
“My own view is there is a world where Canada, Mexico and the United States all agree to have a similar external trade policy,” Mr. Greer said in Davos last week. “We don’t really align [now] or have a common external trade policy with respect to dealing with overcapacity from other countries or investment screening within North America.”
What country overproduces to boost growth, dumping goods abroad? What country’s sharp practices mean that international investments are screened closely? China.
In this context, Mr. Carney’s comment Sunday that Canada is not pursing a free-trade agreement with China becomes somewhat moot. In a customs union, Canada couldn’t have an independent trade policy with China anyway. Even the limited deal achieved by Mr. Carney in Beijing this month would become much more difficult.
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The 1985 Macdonald Commission report, which lit the flame for free trade, opposed a customs union. Free trade was meant to better guarantee access to the U.S. market and make Canadian companies more competitive globally. This was the plan anyway, and Ottawa didn’t want to filter through Washington those efforts beyond bilateral trade.
A customs union approach was reconsidered in the early 2000s. Canadian and U.S. trade policy were so aligned that it was felt a customs union might provide further benefits. Ottawa and Washington could, through matching arrangements abroad, turn the two countries into one economic space without the kinds of disputes – such as over subsidies and dumping – that can gum up free-trade areas. But nothing came of it.
The European Union is a customs union, although it is more than that, too, as it includes a common currency and generally open borders for labour. Trade policy is set by the European Commission, which operates on behalf of the 27 member-countries.
The context of Mr. Greer’s remarks suggested that he would see a customs union – whether multisectoral or economy-wide – as essentially being ruled from Washington. As he has done previously, he emphasized that the North American economy is dominated by the United States but exaggerated that dominance vis-à-vis Canada and Mexico.
Mr. Greer’s thorny proposition also was contextualized by skepticism of open trade and comfort with tariffs as a lever of geopolitical advantage. He described global free trade as a 30-year aberration after centuries of mercantilism – economic policy used to strengthen national interest.
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His comments about USMCA’s future also contained a contradiction. (Mr. Carney said Monday he expects a “robust review” of USMCA.) On the one hand, he has suggested a new free-trade deal with each of Canada and Mexico because the U.S. economic relationship with each is so different. Canada opposed this “dual-bilateral” approach in the early 1990s when Mexico became a third free-trade partner because it would have made the United States the hub in a hub-and-spoke structure. But it happened anyway. Canada-Mexico trade is about 3 per cent of total three-way trade.
On the other hand, Mr. Greer now has floated the idea of a trilateral customs union. It makes little sense to propose breaking up the USMCA because Mexico is different and then suggest a customs union that would deepen the USMCA despite Mexico being different.
“Dual-bilateral” probably is the least bad option now, at least compared with a customs union or termination of USMCA entirely.
Mr. Carney is leading a remarkable number of trade initiatives that will pay dividends. But they aren’t a substitute for the U.S. market. The No. 1 job remains an acceptable deal with Washington. But this might be moving even further into the distance.