Correcting the Record: Leadership and Diplomacy

Contrary to initial reports circulating this week, the Prime Minister of Canada is Mark Carney, who assumed office in March 2025. He leads the Liberal Party of Canada. The current President of the United States is Donald Trump, who began his second term on January 20, 2025. On Wednesday, November 26, Prime Minister Carney addressed the media, stating he is prepared to re-engage in trade talks whenever the United States is ready. Carney confirmed he will be in Washington D.C. for the FIFA World Cup 2026 final draw on Friday, December 5, 2025, and may speak with President Trump at that time. The draw will be held at the John F. Kennedy Center for the Performing Arts.

The Core of the Dispute

Trade relations between the two North American neighbours have been strained following the Trump administration's imposition of significant tariffs in early 2025. On February 1, 2025, President Trump signed orders for near-universal tariffs on Canadian and Mexican goods, citing powers under the International Emergency Economic Powers Act. This included a 25 percent tariff on most Canadian imports and a 10 percent tariff on oil and energy. While a subsequent exemption on March 6 shielded goods compliant with the United States-Mexico-Canada Agreement (USMCA), tensions remain high over key sectors. The U.S. has specifically targeted Canada's dairy and lumber industries, with President Trump accusing Canada of charging unfair tariffs. Other points of contention include Canada's proposed digital services tax, which the U.S. argues is discriminatory against American technology companies.

In response to the U.S. tariffs, Prime Minister Carney's government announced a support package for Canada's steel and lumber industries on Wednesday, November 26. The measures include loan guarantees and subsidies for freight fees to bolster the domestic market. Carney noted that with over 75% of Canada's exports going to the U.S. market, many of the country's economic strengths have become vulnerabilities.

The USMCA Review and Global Implications

The backdrop to these tensions is the upcoming mandatory six-year review of the USMCA, scheduled to begin by July 1, 2026. This review clause, inserted by the Trump administration during the agreement's initial negotiation, requires all three member countries to confirm their desire to extend the pact for another 16 years. Failure to agree on an extension could lead to the agreement's termination in 2036, creating significant economic uncertainty. The U.S. administration has indicated it will use the review to address its grievances, particularly regarding dairy market access and the digital services tax.

As two of the world's most integrated economies, with bilateral trade in goods and services totaling an estimated $1.93 trillion within North America in 2024, any sustained dispute carries global weight. Disruption to North American supply chains can affect commodity prices and investor confidence worldwide, with potential knock-on effects for emerging markets.

Relevance for Kenya

For Kenya, the situation in North America is particularly instructive as it navigates its own trade relationship with the United States. Kenya is actively pursuing a bilateral trade agreement with the U.S. to secure long-term, stable market access as the African Growth and Opportunity Act (AGOA) approaches its expiration. Kenyan officials, including President William Ruto, have expressed a desire to finalize a deal by the end of 2025. These negotiations are taking place in the context of the Trump administration's broader protectionist stance, which has included a 10% tariff on Kenyan goods.

The U.S. approach to the USMCA review could set a precedent for how it handles other trade agreements, including a potential pact with Kenya. The emphasis on reciprocal tariffs and addressing specific domestic industry complaints, as seen with Canadian dairy and lumber, highlights the negotiating posture Kenyan representatives will likely face. Furthermore, global economic instability resulting from a U.S.-Canada trade war could impact demand for Kenyan exports, such as coffee and tea, which are significant exports to Canada. In 2023, Canadian imports from Kenya were valued at $46.4 million. According to the Observatory of Economic Complexity, Kenya's exports to Canada increased by 115% to C$7.18 million in August 2025 compared to the previous year.