How US Trade Irritants With Canada Have Shifted Under Trump—and Why Forced Labour Is Now Included

 

The United States made public this week its annual list of foreign trade barriers, offering hints about the issues Ottawa and Washington will try to iron out as the review of their free trade deal looms.

Some of the recurrent concerns raised by successive U.S. administrations remain, such as Canada’s supply management system for dairy and poultry products, which limits market access for U.S. farmers. Meanwhile, new irritants have been added to the list, touching on a range of issues from aircraft certification to enforcement of policies against forced labour.

The United States Trade Representative (USTR) released its 2026 National Trade Estimate Report on Foreign Trade Barriers on March 31, and the chapter on Canada is eight pages long.

Many of the new foreign trade barriers listed by the USTR are measures that federal and provincial governments implemented squarely in response to U.S. President Donald Trump’s tariff agenda.

Canada has been mostly spared from Trump’s broad tariffs, which the U.S. Supreme Court recently struck down, due to an exemption covering goods under the United States-Mexico-Canada Agreement (USMCA) on free trade. However, the country is still feeling the effects of U.S. sector-specific tariffs on key exports such as steel, aluminum, automobiles, and lumber.

Trump slapped tariffs on Canada and other countries to rebalance trade and re-shore manufacturing, and the data released by the USTR suggest the policy had an impact.

The report says the U.S. trade deficit in goods with Canada narrowed by 25.1 percent in 2025 compared to the previous year. While U.S. exports to Canada fell 3.5 percent, Canadian goods imported into the United States declined by 7 percent.

Asked by reporters to comment on the matter on April 1, Canada-U.S. Trade Minister Dominic LeBlanc said none of the issues listed in the USTR report are “surprising to us,” adding that some have been discussed by Canadian officials in Washington this week.

LeBlanc also noted that some of the issues have already been resolved, including U.S. opposition to Canada’s Digital Services Tax (DST). Carney pledged to abolish the tax last year to restart stalled trade talks with Trump, and the process of rescinding the DST was completed with the Budget Implementation Act receiving royal assent last week.

“Other countries have lists that are much longer than ours,” LeBlanc said. “We’re working through constructively, as we have been for months, with the Americans.”

Retaliatory Irritants

Among the new trade irritants identified this year by the USTR are retaliatory measures such as provincial bans on certain U.S. alcohol products and newly introduced “Buy Canadian” policies.

In response to Trump’s tariffs, provincial governments decided to remove U.S. alcohol from the shelves of government-run stores and cease distributing it in March 2025. Alberta and Saskatchewan reversed course months later, while other provinces kept the policy.

“The United States continues to raise serious concerns regarding these actions and to press Canada to ensure that U.S. alcohol beverages immediately and permanently return to all provincial and territorial markets,” says the USTR report.

The existence of government control over liquor sales in itself has been identified as a trade barrier by the USTR under various U.S. administrations, as it hampers exports of wine, beer, and spirits to Canada.

Different levels of government have also adopted new policies to favour Canadian content in procurement as a way to boost the local economy under pressure from tariffs and keep U.S. suppliers at bay. These have been identified as new trade barriers.

The federal government began implementing its Buy Canadian policy in December 2025, requiring procurements over $25 million to prioritize Canadian suppliers and content, with the threshold falling to $5 million in the spring of 2026.

The USTR also mentions how Ontario, Quebec, and British Columbia have implemented policies aimed at excluding U.S. businesses from public contracts.

The report notes that Canada is party to the World Trade Organization Agreement on Government Procurement, which aims to open government procurement markets among the participants.

Jet Issue

Provincial targeting of U.S. alcohol has been a highly visible retaliatory measure drawing the attention from the public and U.S. manufacturers.

Other high-profile trade spats have also made their way into the 2026 USTR report on trade barriers. It notes how stakeholders have raised concerns about the length of the aircraft certification process in Canada, even though the U.S. Federal Aviation Administration (FAA) and Transport Canada have a “longstanding bilateral aviation safety agreement.”

Trump in late January said he would decertify a Bombardier aircraft over what he said was Canada’s refusal to certify U.S.-made Gulfstream jets G500, G600, G700, and G800. He also threatened to slap a 50 percent tariff on Canadian-made aircraft sold in the United States. All the jets have been certified by the FAA, starting in 2018 for the G500 to 2025, for the G800.

Industry Minister Mélanie Joly subsequently said the issue can be resolved. “The certification process is well underway and … the certification demands were absolutely recent,” she told CBC Newson on Jan. 30. Transport Canada certified the G500 and G600 on Feb. 15.

Forced Labour

A new item in the 2026 USTR report pertains to forced labour and what Canada is doing to prevent related goods from entering the country. Parties to the USMCA are required to prevent goods made from forced labour from entering their markets.

The report notes Canada passed legislation in recent years to tackle the problem while adding that enforcement has lagged.

“It does not appear that Canada is effectively enforcing its forced labor import prohibition, meaning goods made with forced labor may be able to enter and compete in Canada’s market,” says the USTR. The report also criticizes Canada for not imposing enough measures to protect North America from non-market practices. Those can include measures promoting over-capacity or extensive subsidies.

The issue of forced labour from China came to the forefront in recent days as Liberal MP Michael Ma appeared to dismiss the issue during a House of Commons committee meeting last week.

Ma and Prime Minister Mark Carney were later asked by reporters whether they believe forced labour takes place in China. Both of them answered by saying it takes place around the world, with Carney adding that certain areas of China are “higher risk.”

Canadian statistics show very few shipments suspected of containing goods made from forced labour have been detained and interdicted since legislation came into force in 2020, and up to late 2025. The border agency detained 48 shipments and 37 of them were released, two were prohibited, seven were re-exported, and one was abandoned.

By comparison, the United States under its Uyghur Forced Labor Prevention Act detained nearly 42,000 suspected shipments and denied nearly 23,000 over a similar timespan.

The Trump administration ramped up efforts ahead of the USMCA review in July to better protect its market from dumping of goods by China and others. Formal talks with Mexico launched in mid-March focused on better preventing transshipments seeking to take advantage of tariff-free access to the United States.

The USTR also launched in March an investigation into 60 countries, including Canada, to determine whether they’re taking sufficient steps to stop goods made from forced labour.

Carney said earlier this week that Canada has the “most rigorous set of engagements on the issue” of forced labour, noting provisions in international agreements and domestic legislation.

 

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