Trade agreements are deals between nations. President Trump believes the U.S. should benefit from other countries’ trade deals. If nations expect Washington to demand the best concessions without cost, they will likely offer less to U.S. negotiators initially.
Trade Disputes with Brazil and Canada
This thinking links to disputes with Brazil and Canada. The U.S. complains these countries favor certain trade partners over the U.S., labeling the variance as “discrimination.”
Case of Brazil
Brazil, including through Mercosur, holds “partial scope” trade agreements with Mexico and India. These agreements reduce tariffs on selected goods, enabling Mexican and Indian exports to face lower tariffs than American products in Brazil. The U.S. Trade Representative included such “unfair, preferential tariffs” in its Section 301 investigation of Brazil. Preferences for Mexico cover over 1,000 tariff lines, and India hundreds more.
These partial-scope agreements pose challenges in the trading system. Congress has questioned if they meet the WTO requirement for free trade areas to cover “substantially all trade.” The U.S. argument extends to claiming American exporters face a disadvantage simply because others negotiated for better terms.
Case of Canada
Canada’s trade agreements are another point of contention. Under the Canada-European Union Comprehensive Economic and Trade Agreement, Europe arranged preferential cheese access. The U.S. secured a different dairy agreement in USMCA. However, Washington cited Section 338 of the Tariff Act against Canada, highlighting better treatment for European cheese as discriminatory against the U.S.
As shown by Mona Paulsen, Section 338’s creators recognized the U.S. cannot indefinitely demand preferences another country negotiates. Failed U.S.-Canada negotiations reportedly stalled partly over an unusual U.S. demand regarding Canada’s future trade deals.
Retroactive Most Favored Nation Doctrine
When combined, these cases illustrate a new doctrine. Washington employs Sections 301 and 338 like a most favored nation clause. This practice lets the U.S. gain concessions others paid for, without compensation or prior agreement.
In investment treaties, most favored nation clauses ensure equal treatment for American investors as enjoyed by third-country investors. These include options for demanding compensation, negotiating terms, or declining to extend benefits. Such processes are absent here.
When Brazil grants Mexico a tariff break, Washington calls it unreasonable under Section 301. Canada’s preferential access for European cheese is labeled discrimination under Section 338. Threats of tariffs enforce these claims, akin to retroactive most favored nation status without mutual consent.
Implications of the New Approach
This approach undermines established trade systems that balanced non-discrimination and preferential trade through negotiation. Under USMCA, Mexican goods get preferences not extended to Brazilian goods. Washington does not automatically share USMCA benefits with others complaining of bias. So, why should its partners?
If the U.S. wants better treatment like what Canada provides another nation, it should negotiate. Forcing terms through tariff statutes damages credibility and evidences a free-riding problem.
This is critical when the U.S. wishes to influence future Canadian agreements. This concept is expanding. USMCA already requests Canada to inform before negotiating with non-market economies, permitting any party to terminate on six months’ notice. August demands went beyond, seeking to control other countries’ agreements.
These scenarios are not theoretical. The Malaysia-U.S. agreement necessitates consultation on any future deal potentially affecting American interests, though such terms lack definition.
Historically, the U.S. advocated earning access through negotiation. Trump’s strategy diverges: Offering someone else a better deal might lead America to demand the same or face tariffs until it does. This does not align with traditional most favored nation policies and lacks reciprocity, functioning as a non-consented most favored nation clause.
Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at Georgetown University. Barry Appleton serves as interim director at the Balsillie Legal Advisory Centre and Co-Director at the Center for International Law at New York Law School. Copyright 2026 Nexstar Media Inc. All rights reserved.