Trump pushes Canada over illicit cigarette trade in USMCA talks

Canada’s shadow economy includes illegal tobacco that makes up a large share of sales in provinces such as New Brunswick, Manitoba and Ontario, with the Royal Canadian Mounted Police estimating over 50 illicit factories in Ontario and Quebec. Smuggling routes through the Cornwall, Ontario corridor and other border towns have yielded millions of contraband cigarettes, firearms and drugs in recent investigations. The Trump administration argues that this unchecked flow undermines the United States’ border security and is using it as a bargaining chip in the USMCA joint review, with U.S. Trade Representative Jamieson Greer signaling possible 50% tariffs on Canadian autos, dairy and alcohol.

Critics note that Canadian enforcement lags behind U.S. technology and that organized crime simply shifts to the most profitable illicit market when pressure is applied. The administration’s stance aims to compel Canada to upgrade inspection capabilities, close production hubs near Indigenous reservations, and establish a joint intelligence task force.