On Jan. 2, 1988, the News reported that Prime Minister Brian Mulroney and U.S. President Ronald Reagan signed the first Canada-U.S. trade agreement.
The deal signed on Jan. 2 went into effect the following January after both countries enacted the requisite legislation to implement it.
The News is looking back at notable events from Medicine Hat and Canada’s history as we celebrated our 140th publishing year on Oct. 29.
The 1988 Free Trade Agreement began a period spanning more than 30 years of nearly unfettered trade between two of the world’s two largest trading partners.
The agreement was superseded on Jan. 1 1994 by the North American Free Trade Agreement, which extended free trade across the continent by drawing in Mexico.
Under the conditions created by NAFTA, trade between Canada and the U.S. grew at a tremendous pace. By 2018, total Canadian merchandise exports had grown from $101.6 billion in 1989 to $438.3 billion, an unprecedented expansion of Canadian exports to a single country.
Merchandise imports from the U.S. likewise experienced drastic growth, increasing from $88.1 billion in 1989 to $304.7 billion in 2018.
NAFTA governed trade between the three allies until 2018, when President Donald Trump presided over a new free trade agreement during his first term: the Canada-U.S.-Mexico Agreement, or CUSMA.
The new trade agreement included free trade between the two countries continued at an impressive pace. By 2023, trade between Canada and the U.S. exceeded $1.3 trillion, with $3.5 billion crossing the border daily.
At the time, Trump called the deal “possibly the greatest deal ever signed.”
But in 2025, with the return to power of Trump, 35 years of free trade were halted with the initiation of a trade war which stuck Canadian goods with tariffs as high as 50 per cent.
The first wave of tariffs, issued in March 2025, imposed a blanket tariff of 25 per cent on goods imported from Canada, and 10 per cent for Canadian energy products. The general tariff was increased to 35 per cent in August.
Key sectors like steel, aluminum and automobiles have contended with tariffs as high as 50 per cent.
However, thanks to the continued protection of CUSMA, as much as 90 per cent of Canadian goods are exempt from the blanket tariffs for complying with the agreement.
A product complies with the terms of the agreement by demonstrating that it is substantially produced in Canada.
CUSMA is up for review in 2026.
Still, Canadians have protested the imposition of tariffs in 2025 as running counter to the history of free trade between the two countries, and the spirit of collaboration which has underwritten bilateral trade.
As a result, Canadians embraced the adage “Elbows Up” in 2025, boycotting American goods and reducing cross-border travel.
Provinces stopped stocking U.S. liquor in February, reducing American exports to Canada by 85 per cent. Cross-border return trips declined for 11 consecutive months in 2025, with November’s travellers dropping from 1.8 million in 2024 to 1.3 million in 2025.
