US – Canada Free Trade Turns 35

Free trade between the US and Canada will celebrate its 35th anniversary on New Year’s Day, 2024. 

In 1982 the US unemployment rate reached 10.8%, the highest level in the entire post-war period.  Over 12 million job-seeking Americans were idled. In Canada unemployment reached 13%. There was sharp disagreement about the best course of action to address the underlying economic stagnation. Unions and employment advocates called for higher tariffs and stronger trade barriers as the only effective way to protect jobs.

Predictions of massive job losses, a deterioration of worker rights and a loss of sovereignty were major concerns raised by those opposing free trade.

US President, Ronald Reagan argued that the best medicine for the unemployment crisis and an under-performing economy was not protectionist measures, but free trade. Many on both sides of the political divide called his ideas naïve and reductionist.  Canadian Prime Minister Brian Mulroney also faced push-back, with opponents saying a trade deal would simply make Canada the 51st US state.

The Reagans hosting the Mulroney’s at a White House state dinner in 1988.

Trade negotiations took five years and yielded the Canada-US Free Trade Agreement (CUSFTA) in 1987, which came into full effect on January 1st, 1989.  Mexico was not included in this initial agreement and lobbied hard to have the agreement expanded to include the whole continent.  Once again, labour leaders and politicians predicted economic disaster if a low-wage economy like Mexico would be added to the deal.  It would take until 1994 before the North American Free Trade Agreement (NAFTA) was signed into law and all three countries began to remove tariffs on each others’ goods and services.

Celebrating the 1994 NAFTA signing.  Salinas, Bush, and Mulroney.

As with so many things, the tally of wins and losses can be difficult to distill from the wide array of other changes happening in the global economy at the time. Technological change in the early 1990’s was dramatic, China was growing as an export powerhouse, the Cold War ended, and the European Union was also liberalizing trade.  In these years, the economies of all three countries saw dramatic growth and economists attribute the largest impacts to NAFTA.

  • US trade with its neighbours more than tripled following the deal.
  • It’s estimated that 14 million US jobs are directly tied to open trade with Mexico and Canada.
  • Consumer prices declined, especially for agricultural products and energy.

Cornerstone Timberframes has been exporting timber structures to the US for more than 21 years.  While free trade has felt positive it doesn’t show up as a factor for the builders and homeowners who choose us.  Our clients tell us their purchases are driven primarily by three considerations:

  • The attentive and friendly service that Cornerstone is famous for.
  • Feeling heard and understood by our design team, which results in beautiful, personalized designs.
  • The sweet realization that a US dollar is worth 35% more in Canada.

If you’re looking to build and want to realize the benefits of free trade, talk to a friendly Cornerstone Timberframes representative today!