With a potential trade war between the United States and Canada looming, companies that move employees around North America may be left wondering about the other effects that the Trump Administration’s decisions will have on Canada, particularly on labour mobility and immigration between the two countries. Although tariffs do not have a direct effect on immigration, a possible trade war and looming free trade agreement negotiations create some concern about future impacts on cross-border labour mobility.
Canada-United States-Mexico Agreement
In May 2017, the first Trump Administration released a letter to Congress formally launching their efforts to renegotiate the North American Free Trade Agreement (“NAFTA“) between Canada, the U.S. and Mexico. The Canada-United States-Mexico Agreement (“CUSMA,” referred to as “USMCA” in the U.S.) was negotiated in 2018 and came into force in 2020. CUSMA is set to expire 16 years after coming into force, on June 30, 2036. The agreement includes a requirement for a formal review at least every six years, and the next review is scheduled for 2026.
As of 2025, the current free trade agreement may again be affected by the recent U.S. election, as there is speculation that Trump will not wait until 2026 to review CUSMA. This is now even more likely as an additional layer to the ongoing trade war threats. With that considered, it is important to understand the immigration benefits CUSMA provides to both countries.
CUSMA provides streamlined working status for party countries
In relation to cross-border labour mobility, CUSMA simplifies the process for employers looking to hire talent from a party country or transfer existing employees throughout North America.
As an example, employers looking to hire CUSMA-qualified U.S. or Mexican workers for positions in Canada can secure work permits that are exempt from the more complex Labour Market Impact Assessment (“LMIA“) requirements. LMIAs are approval processes employers in Canada must undergo in most cases prior to hiring a foreign worker. The purpose of an LMIA is to ensure that hiring a foreign worker will not negatively impact the Canadian labour market, and demonstrate that there is actually need for a foreign worker. The LMIA process significantly extends the time and cost required to get foreign workers on the ground in Canada, making the ability to secure a LMIA-exempt work permit under CUSMA attractive for Canadian employers.
These types of streamlined labour mobility options and benefits are reciprocal between Canada and the U.S. CUSMA, promote labour mobility throughout North America and streamline the process for work permits or non-immigrant working visas in both Canada and the U.S. The potential suspension or removal of this agreement would impact employers looking to hire CUSMA-eligible candidates or move existing employees cross-border.
With the possibility of CUSMA paused or permanently removed, employers must be alive to potential impacts on their foreign worker reliance, from increased processing times to higher costs.
Commonly used CUSMA categories for North American employers
There are a variety of work permits available under the free trade agreement, making the immigration process faster and easier for North American employers seeking move workers throughout the continent.
The CUSMA Professional category is one of the most commonly used CUSMA-based work permit category. Individuals in this category must have pre-arranged employment in Canada in an occupation that relates to their professional qualifications and falls within an eligible CUSMA profession. There is an exhaustive list of professions including accountants, engineers, lawyers, social workers, urban planners, dentists, pharmacists, physicians and registered nurses, to name a few.
Intra-company Transfers (“ICT”) is another common category under CUSMA. ICTs allow employees to transfer on a temporary basis to work for a related company in another CUSMA country where certain requirements are met. The transferee’s role must be managerial, executive or involve specialized knowledge to be eligible for an ICT.
Less commonly used categories under CUSMA include the Trader and Investor categories. Trader work permits are available to eligible U.S. and Mexican nationals who intend to engage in substantial trade of goods in services in Canada between either the U.S. or Mexico, while Investor permits are available to eligible U.S. and Mexican nationals who have made or are in the process of making a substantial investment in Canada.
USMCA, as it is referenced in the U.S., provides similar immigration benefits for Canadian and Mexican nationals looking to engage in certain types of work in the U.S. The most commonly used immigration categories under USMCA are USMCA Professional (TN), ICT (L1), and Trader-Investor (E2). These categories are substantially similar to their above-listed Canadian counterparts and operate in a reciprocal manner.
Potential fallback agreement
NAFTA and subsequently CUSMA were preceded by the Canada-United States Free Trade Agreement (“CUSFTA”), which came into force on January 1, 1989. CUSFTA is currently in force but superseded by CUSMA. This opens the possibility that CUSFTA will be revived in the event CUSMA is suspended or terminated. As CUSFTA contains labour mobility provisions similar to those found in CUSMA, this agreement could be looked to alleviate labour mobility concerns for North American employers if CUSMA is terminated. However, Canada and the U.S. may each need to assent to the revival of CUSFTA. Further, if assent is not required, the U.S. may simply terminate CUSFTA as well, bringing about the same result. With CUSFTA not being operational for more than 30 years at this time, its current practical application is uncertain.
Impacts on employers
While the exact changes the Trump Administration may trigger remain unknown, it is important to keep in mind that cross-border employment may be impacted. New and different free trade agreements and programs may be on the horizon. Labour mobility challenges across the entire North American labour market can be expected in the event the free trade agreement is terminated or suspended.
If CUSMA/USMCA ceases operation, there will be increased barriers to hiring foreign workers in all three countries that are party to the agreement. Employers should be on the lookout for possible changes to this agreement in the future, especially as the 2026 review approaches. The free trade agreement may look substantially different following review. Should CUSMA end entirely, Canada may seek to negotiate new bi-lateral free trade agreements with the U.S. and Mexico directly. These new agreements may not have the same labour mobility as current three-party agreement.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.
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