USMCA Review Kicks Off as Trump's Ambiguous Stance Adds Uncertainty
Alina Collins
What exactly is this review deciding?
USMCA took effect in 2020, replacing the older NAFTA. It covers nearly $2 trillion in annual trade among the US, Mexico, and Canada.
The agreement has a built-in sunset clause: if the 2026 review fails to produce a renewal, the deal expires automatically in 2036. This means → the review is not a formality — it is the legal mechanism that determines whether the agreement lives or dies.
The scope is vast — auto manufacturing, investor protections, intellectual property, digital services. Multinationals such as Airbus and Nissan have production footprints built around the three-country framework.
Why is Trump souring on a deal he signed himself?
Trump said publicly in June: "I'd rather not sign it, I'd rather let it terminate … but I maybe will sign it." In plain terms = he is neither committing to renewal nor declaring withdrawal — he is turning the agreement's future into a bargaining chip.
This reflects a shift in the White House's framing of USMCA — from "achievement" to "leverage tool." The ambiguity itself is a sustained form of pressure on Canada and Mexico.
Markets, as a result, cannot price in a directional outcome. Uncertainty has become the baseline, not a transitional phase.
Could the agreement actually be torn up?
Oxford Economics assesses the probability that Trump triggers the exit clause as "extremely low" — withdrawal would directly damage investment and trade in swing states across the US Midwest. This means → the political cost acts as a hard constraint on exit.
But the firm also says it no longer expects tariffs to be rolled back broadly. The most likely outcome is "small-scale, sector-specific tariff-reduction deals."
In plain terms = the agreement probably survives, but a return to low-tariff normalcy is off the table. A "neither dead nor alive" status quo is the most probable baseline.
What pressure are Canada and Mexico each facing?
About 80% of Mexico's exports go to the US. Mexico has completed two rounds of bilateral tariff talks, with a third set for late July aimed at securing rates better than those offered to other countries — or full exemption.
Roughly 70% of Canada's goods exports go to the US, including millions of barrels of crude oil daily. Canada is trying to diversify its export markets, but that takes time.
One telling detail: US-Canada tariff talks had advanced to a deep stage last October, but Trump abruptly ended negotiations after Ontario aired TV ads in the US quoting former President Reagan's anti-tariff rhetoric. This reflects how heavily the process depends on political mood — technical progress can be zeroed out by non-technical triggers at any moment.
What does this mean for North American supply chains?
Canadian Prime Minister Carney said the day before the review: "I don't expect anything dramatic to happen tomorrow." Mexican President Sheinbaum said the three nations aim to issue a joint statement, and have signed letters requesting a 16-year renewal of the agreement.
Oxford Economics notes that uncertainty alone is already dragging on confidence and investment across North America, with Canada and Mexico bearing the higher cost.
This means → even if the agreement is eventually renewed, the lengthy negotiation cycle is itself a cost. Multinationals will not wait for the review to conclude before adjusting capacity plans and investment decisions.
Content is for reference only, not financial advice.