On December 8–10, 2025, former U.S. President Donald Trump advanced three interlinked trade positions affecting North American agriculture and resource-sharing: (1) the possibility of “very severe” tariffs on Canadian fertilizer to encourage domestic production; (2) a new 5% tariff threat on Mexican imports unless Mexico immediately delivers water owed under the 1944 Rio Grande Water Treaty; and (3) the suggestion that the USMCA (known as CUSMA in Canada) could be allowed to expire or be replaced with separate bilateral agreements with Canada and Mexico. Together, these statements reflect a strategy of leveraging tariffs to address supply-chain costs, resource obligations, and broader trade architecture across North America. Global News, Farm Progress, and Economic Times reported Trump’s fertilizer comments and the rationale tied to input costs; USA Today, CNBC, Politico, and Bloomberg chronicled the water-tariff threat and the treaty context; and CBC, Benzinga, and CFR documented the administration’s openness to fragmenting USMCA and industry concerns about destabilizing integrated supply chains.
Tariffs on Canadian Fertilizer
Scope and intent. At a White House roundtable announcing agricultural support, Trump stated he would consider “very severe tariffs” on fertilizer imports from Canada “if we have to,” arguing that tariffs could bolster domestic fertilizer manufacturing and counter rising input costs for U.S. producers. The remarks were framed as part of a broader effort to reshore essential inputs and correct what he characterized as pricing distortions affecting U.S. farms. Global News captured the exchange and highlighted Agriculture Secretary Brooke Rollins’s focus on domestic supply, while Farm Progress underscored Trump’s parallel criticism of alleged dumping in other agricultural commodities.
Dependence on Canadian potash. The United States relies heavily on Canadian potash largely from Saskatchewan for potassium-rich fertilizers, with Canada supplying well over half of U.S. imports. This dependence is corroborated by industry tallies and provincial data, with Economic Times and Global News noting earlier tariff adjustments to partially accommodate fertilizer shipments and mitigate price spikes for U.S. farms. The centrality of Saskatchewan’s mines to North American fertilizer flows was further reinforced by CKOM and CBC, which traced supply chains and export profiles.
Provincial and industry responses. Saskatchewan Premier Scott Moe urged caution, warning that punitive tariffs could either push U.S. farmers toward Russian sources or raise costs domestically, thereby undermining the policy’s stated objectives. Saskatchewan industry groups and producers expressed concern about job losses and reduced application rates, while emphasizing the province’s global diversification. CKOM and CBC documented these reactions, noting that a tariff shock could create a glut of potash in Saskatchewan and force production cutbacks.
Economist views. Agricultural economists caution that imposing tariffs on fertilizer can increase U.S. farmers’ expenses, compress margins, and reduce output in the near term, even if longer-term reshoring is successful. Analysts at CFR and experts cited by Bloomberg argue that input inflation can ripple across grains and livestock, potentially raising food prices and weakening competitiveness vis‑à‑vis global producers. The short-term macro effect could be higher farm operating costs and price volatility, with uncertain benefits from domestic capacity expansions that typically require multi-year investments.
Trade architecture implications. Fertilizer tariffs would not exist in isolation: they would interact with ongoing debates about USMCA’s review and the stability of North American supply chains. Industry testimony during U.S. hearings summarized by CBC and Bloomberg indicates broad business support for preserving USMCA, partly to avoid input shocks and maintain predictable market access for agricultural inputs. Disrupting fertilizer flows could become a flashpoint if USMCA is renegotiated or split into bilateral deals.
Tariff Threat Over Mexico’s Water Deliveries
The ultimatum. Trump’s Truth Social posts on December 8, 2025 demanded that Mexico deliver 200,000 acre‑feet of water by December 31 under the 1944 Rio Grande Water Treaty, threatening a new 5% tariff if Mexico failed to comply. He asserted that Mexico owes the U.S. ~800,000 acre‑feet (some reports cite 865,000 acre‑feet) over the last five-year cycle, and that the shortfall is harming Texas crops and livestock. USA Today and Politico reported the threat’s timing shortly after a White House farm roundtable and the specificity of the demand; CNBC and Bloomberg outlined the treaty framework and prior negotiations.
Existing tariff backdrop. The United States already collects 25% tariffs on Mexican goods that do not meet USMCA rules of origin, with additional duties on autos, auto parts, steel, and aluminum. The water-linked 5% tariff would thus be layered atop this existing regime, subject to product exemptions and enforcement decisions. Politico and Mexico News Daily traced this tariff matrix and emphasized that many Mexican goods remain duty‑free under USMCA compliance.
Mexico’s position. Mexican officials attribute delivery shortfalls to severe drought, infrastructure constraints, and competing domestic demands, while signaling willingness to negotiate. Mexico News Daily and KJZZ (Fronteras Desk) documented planned virtual meetings and noted that Mexico’s subsecretary for North America stressed equitable distribution amid hydrological scarcity. Bloomberg and CNBC added that President Claudia Sheinbaum expected discussions to lead to a workable arrangement that recognizes extraordinary drought conditions.
Legal basis for a water-linked tariff.
- Treaty framework: The 1944 Water Treaty allocates cross-border water deliveries via the International Boundary and Water Commission (IBWC); it does not itself create tariff mechanisms. Enforcement of treaty compliance typically proceeds through diplomatic channels and IBWC technical arrangements, rather than trade penalties. USA Today and Politico explain the treaty’s five-year accounting for Mexico’s Rio Grande tributary deliveries (1.75 million acre‑feet) and reciprocal U.S. obligations from the Colorado River (1.5 million acre‑feet annually).
- Trade authority: The tariff threat would rely on U.S. domestic trade authorities e.g., Section 301 (unfair trade practices), International Emergency Economic Powers Act (IEEPA), or Section 232 (national security) as political instruments to induce compliance. While recent reporting (e.g., Politico, Bloomberg) describes the tariff in political terms, it does not identify a specific statutory invocation, suggesting the White House is signaling an instrument rather than detailing the legal pathway. Analysts note that linking treaty performance to tariffs would be novel and likely contested if implemented.
Farmer reactions in the U.S. and Mexico. Border‑region producers in Texas have long pressed for reliable treaty deliveries, emphasizing irrigation needs and prior crop losses attributed to water scarcity. USA Today and Fox News recounted warnings from citrus and sugar sectors and noted that Texas groups previously called for federal action to enforce deliveries. In Mexico, farm groups and local leaders facing exceptional drought protested water diversions that could imperil domestic crops, as reported by Al Jazeera and KJZZ; these groups argue that tariff pressure cannot create water and risk further economic stress on rural communities already affected by climate variability.
Reconsidering USMCA: Trilateral vs. Bilateral
Trump’s position. Trump stated he is open to letting USMCA expire or negotiating separate agreements with Canada and Mexico, underscoring differences in labor markets, trade profiles, and rule of law across the two relationships. Global News recorded his comment that the agreement “expires in about a year,” while Benzinga reported USTR Jamieson Greer hinting at potential withdrawal or splitting the pact into two deals.
USTR framing and review timeline. POLITICO’s “Morning Trade” brief explains that USTR must deliver a report to Congress by early January 2026 (180 days before the July 1, 2026 review milestone) indicating whether to extend USMCA for another 16 years, renegotiate terms, or begin exit procedures. CBC reporting from Washington captured testimony from U.S. business leaders who overwhelmingly favor continuation, arguing that CUSMA/USMCA underpins supply-chain certainty in autos, agriculture, and services.
Industry and expert reactions. A Council on Foreign Relations brief cautions that scrapping or splitting USMCA risks fragmentation of integrated supply chains and complicates dispute settlement, while former negotiators interviewed by Bloomberg urge strengthening not dismantling the agreement as a vehicle for regional competitiveness against global rivals. Quartz amplified Greer’s comments about separate deals and noted that Trump’s tariff posture has already injected uncertainty into North American trade even among trusted partners.
Automotive and agricultural linkages. The automotive sector and agri‑food chains are emblematic of cross‑border specialization: rules of origin, just‑in‑time logistics, and product standards depend on trilateral coherence. Witnesses summarized by CBC and Bloomberg argue that bilateral deals could produce regulatory misalignments and increase transaction costs, reversing scale efficiencies embedded in the current framework. Farmers and input suppliers warn that unsettling the agreement during a fertilizer tariff dispute and a water shortage could compound operational risks and price volatility.
Policy trade‑offs. While bilateral agreements might allow tailored disciplines for labor, environment, or rules of origin, they could also reduce predictability and weaken collective bargaining power vis‑à‑vis extra‑regional competitors. Analysts cited by CFR and Bloomberg contend that deepening trilateral integration remains the most credible path to resilience, efficiency, and strategic competition with major economies.
Farmer Reactions to Tariffs (Canada, U.S., Mexico)
Canada (fertilizer). Saskatchewan producers and trade groups warn that U.S. fertilizer tariffs would either raise American farm costs or shift purchases to Russia/Belarus, harming both U.S. competitiveness and Saskatchewan’s potash sector. CKOM quoted APAS’s president questioning the logic of restricting access to a critical input, while CBC highlighted potential layoffs and production scaling if U.S. demand drops sharply.
United States (fertilizer & water). U.S. farmers express mixed views. Some back a tariff threat to reshore inputs and discipline pricing, but many caution that short‑term costs would surge. On water, Texas farm groups have urged enforcement of treaty obligations to protect irrigation and livestock; USA Today and Fox News chronicled prior crop losses and urgent calls for deliveries. The consensus is that predictability in inputs and water supply is paramount to financial planning for the 2026 season.
Mexico (water). Mexican farmers facing exceptional drought fear that reallocating water to meet treaty quotas could threaten domestic harvests, while a U.S. tariff adds economic strain to export markets. Al Jazeera reported demonstrations and pressures on Mexico’s Congress, while KJZZ captured expert commentary that a tariff “won’t bring more water to the system,” underscoring the physical limits of hydrological scarcity.
Legal Basis for a Water Tariff (Detailed)
Treaty provisions. The 1944 U.S.–Mexico Water Treaty (administered by the IBWC) sets quantitative delivery obligations over five‑year cycles Mexico delivers 1.75 million acre‑feet from specified Rio Grande tributaries, and the U.S. delivers 1.5 million acre‑feet from the Colorado River annually. The treaty is technical and allocative; it does not authorize trade penalties as an enforcement mechanism. USA Today and Politico describe the treaty framework and its accounting schedule; CNBC and Bloomberg reiterate the administration’s contention that Mexico is substantially in arrears.
Domestic trade law pathways. Implementing a tariff response would require invoking U.S. statutory authority outside the treaty e.g., Section 301 (addressing unfair practices affecting U.S. commerce), IEEPA (national emergency powers in foreign affairs), or Section 232 (national security). Recent reporting documents the threat but not a specific statutory invocation, implying the White House is reserving options. Legal scholars note that connecting resource non‑compliance to trade penalties would likely face judicial scrutiny, especially if the measure burdens USMCA‑compliant goods. Politico and Bloomberg discuss the ambiguity of the legal route and the potential to escalate if negotiations fail.
Procedural considerations. Any formal tariff order would likely include: (1) an executive proclamation specifying scope, timing, and exemptions; (2) a notice-and-comment period or interagency consultation (USTR, Commerce, Treasury) where applicable; and (3) IBWC coordination to avoid undermining treaty channels. Because USMCA provides duty‑free treatment to compliant goods, a water‑tariff overlay could require carve‑outs, creating a compliance mosaic that importers and customs authorities must navigate. CNBC outlines existing duty structures; Mexico News Daily describes how prior tariff instruments were layered over select product classes.
Conclusion
Trump’s December statements illustrate an integrated tariff strategy deployed across inputs (fertilizer), resources (water), and trade architecture (USMCA). The near‑term objective is price relief and domestic capacity building for U.S. agriculture, backed by the leverage of trade penalties. Yet expert analysis warns of countervailing risks: higher input costs for U.S. farmers, disrupted supply chains for Canada’s potash sector, economic stress on drought‑hit Mexican producers, and a fragmentation of North American trade rules that could increase uncertainty and compliance costs.
As the USMCA review proceeds toward July 1, 2026, decision‑makers face a delicate balance: enforce obligations and pursue resilience, while preserving the predictability and efficiency that trilateral integration has delivered for decades. Farmers across the continent stress that stability in inputs and resources fertilizer and water is the cornerstone of their planning. Policymakers, in turn, will need to align trade tools with hydrological realities and supply‑chain economics to avoid solving one problem by creating several more.