For Caroline Mulroney, the chill settling over Canada’s relationship with the United States is unlike anything she has known — and she has had a front-row seat to the highs and lows of Canadian politics.
Mulroney, the daughter of former prime minister Brian Mulroney, grew up watching a period when Ottawa and Washington worked in tandem. She points to her father’s close rapport with Ronald Reagan, a partnership that helped pave the way for a landmark Canada-US free trade agreement.
“It was his work with Ronald Reagan that led to our first free trade agreement with the United States, built on their friendship and the belief that our economies would do better working together,” she said from her office as Ontario’s President of the Treasury Board and Minister of Francophone Affairs – roles she will soon leave.
Now, she said, that sense of ease has been replaced by tension.
“I haven’t seen it like this before,” she said.
Mulroney’s comments come as relations have worsened markedly since Donald Trump returned to office in 2025.
A new web of American tariffs has put pressure on the long-standing free trade agreement between the US, Canada and Mexico, known as USMCA, which is due to be reviewed this summer.
Talks could reshape the deal, with the prospect of additional tariffs and tighter rules governing where vehicles are made.
Few sectors illustrate the countries’ economic interdependence more clearly than autos, where parts and labour routinely flow back and forth across borders.
Caroline Mulroney has seen the close Canada-US ties forged by her father Brian Mulroney wane
The US president has focused his criticism on a supply chain in which an American truck may cross the Canada-US border multiple times before it reaches final assembly.
“There is no such thing as an American-built vehicle, no such things as a Canadian-built vehicle. We build vehicles together,” said Brian Kingston, President of the Vehicle Manufacturers’ Association.
For manufacturers, Kingston said, shifting trade rules — and the uncertainty that comes with them — are already rippling through the industry, with some carmakers reducing production in Ontario.
Brian Kingston believes cross border co-operation is vital for the vehicle manufacturing industry
With more than 100,000 workers employed in Canada’s automotive sector, the stakes are high as companies and communities wait to see whether the US, Canada and Mexico free trade agreement is renewed this summer — or whether they must brace for a tougher set of rules.
“If we don’t have access, there is no Canadian automotive industry. That is just the way our industry is structured. We do need an agreement with the Americans, if not, our industry looks smaller and it will employ less people,” he said.
Wake-up call
At the same time, a growing number of Canadians are treating Washington’s new posture as a jolt — a reminder, they say, that Canada needs to reduce its reliance on its closest trading partner.
“We do have to become less dependent on the United States, not only in economic terms but also in a strategic sense,” said Associate Professor of Canadian history at the University of Ottawa, Damien-Claude Bélanger.
He noted that successive governments have tried to diversify Canada’s relationships for decades, but believes the current moment is different in its urgency.
“The Canadian government has attempted to limit our dependency on the United States now, really since the 1940s. It has been a long-standing effort by a whole series of governments, both Liberal and Conservative. But it has never been done so seriously as it has been now and that’s likely to, over time, have an effect.”
Federal and provincial leaders have stressed that Canada is not severing ties with the US — but they argue the country must broaden its options, courting new alliances and investment beyond the American market.
“This may feel like a setback but actually it’s opening up a number of opportunities globally,” said Donna Skelly, Speaker, Legislative Assembly of Ontario.
“Ireland and Canada, I believe, have an opportunity to identify where we can collaborate. We have such deep ties. Let’s just move forward,” she said.
Donny Skelly believes strains in Canada’s relationship with the US can also open up opportunities
Public sentiment is shifting as well, with Canadians re-evaluating what their neighbour to the south represents — and whether travel and everyday connections feel as straightforward as they once did.
According to official figures, number of Canadians who entered the country after returning from the US in 2025 was down 25%.
Separate research from the University of Toronto, using mobile phone activity as a proxy for movement, suggested there was around a 42% reduction in visits to US cities by Canadian residents last year.
On the streets of Ottawa, some people said they have stopped travelling to the United States “just on morals”.
Canadians are recalibrating their attitudes to their southern neighbour
One man said he used to drive from Ottawa to New York state — a trip of about 45 minutes — but has stopped taking his smartphone with him, worried US border officials might see anti-Trump content on his device and deny him entry.
Still heavily dependent
Despite the unease, the reality on the ground is that the US and Canada have spent decades weaving their economies together, leaving few quick fixes for policymakers eager to chart a new course.
Canada’s economy remains heavily dependent on the US with nearly 70% of its exports heading south of the border. Most products are also entering the US duty free.
Even if negotiators reach a trade deal in the coming months, uncertainty hangs over what the next chapter of the relationship will look like.
Mulroney said she is still holding out hope that the two sides can find common ground.
“I understand the ground has shifted in a dramatic way and I assume in a fundamental way, one that will stay with us,” she said.
“Our economies are deeply integrated and no province in Canada knows that better than Ontario. We have to get back to a place where we can trade more freely than we are now,” she added.
