As the United States, Mexico and Canada head into a high-stakes review of the U.S.-Mexico-Canada Agreement (USMCA) this year, businesses across North America are bracing for a round of trade negotiations that could redraw supply chains, reopen tariff battles and test the future of regional economic cooperation. 

The USMCA is scheduled for a joint review starting July 1, 2026, where all three countries will kick off talks to determine whether to continue the agreement, renegotiate it, or end it altogether. Should they decide not to end it, the deal will expire in 2036. And although President Donald Trump was the one who originally pushed for the USMCA to replace the North American Free Trade Agreement in 2020, he's been vocal regarding his view that the deal should be fundamentally altered as part of its first official review in July.

During a visit to Detroit, Michigan on January 13, Trump asserted that "there's no real advantage to it," calling the USMCA "irrelevant." In the lead-up to those crucial talks, companies are now left to wonder: is this a negotiating tactic being used to score a better deal for the U.S., or is a full withdrawal from the USMCA actually on the table for the U.S.?

"There are real concerns that the United States could threaten to pull out of the agreement, mainly because the deal has an explicit exit ramp," says Irina Tsukerman, president of political risk assessment firm Scarab Rising. The USMCA allows any of its three members to unilaterally pull out of the deal as long as they provide written notice six months in advance. 

Withdrawing from the deal would have severe consequences for U.S. factories and consumers, as well as Mexican and Canadian exporters, Tsukerman argues. Many items eventually sold in America, including machinery, electronics, appliances and food, rely heavily on parts and materials that move across U.S.-Mexico-Canada borders. 

The auto industry is particularly vulnerable, because car manufacturing and distribution has been integrated between the U.S. and Canada since the signing of the Automotive Products Trade Agreement of 1965, better known as the Canada-US Auto Pact, with Mexico added into the highly complex ecosystem since the North American Trade Agreement (Nafta) came into force in 1994. Auto parts and partially built cars can cross the borders seven or eight times before an automobile is completed. 

Without the USCMA, all those products would be subject to any tariffs imposed among the three countries at each crossing.

In early December, the American Automotive Policy Council went so far as to call the USCMA "the most vital trade agreement for America's automakers," urging the Trump administration to preserve the core structure and focus instead on "targeted refinements." Around that same time, the U.S. Chamber of Commerce asserted that the USMCA is "critical to our economic future," as a means to allow U.S. exports to reach North American markets tariff-free.

Given the stakes, American University adjunct professor of international business Babak Hafezi predicts that the three countries will likely come to some sort of accord when it's all said and done. And although there's always a chance under this current administration that the U.S. will walk away from a trade deal it views as unfair, that threat shouldn't be discounted as a negotiating tactic based on Trump's spotty history when it comes to following through on promised tariffs.

"The economics of North American production make a clear break costly to all three countries, and the U.S. can claim a withdrawal even if that is not the endpoint of the negotiations," he says.

Still, even a relatively modest renegotiation could create months of uncertainty for companies looking to make long-term investment and sourcing decisions, says Allan Hou, sales director for logistics company TSL Australia. And for manufacturers already grappling with higher interest rates, shifting tariff rates and geopolitical risk, the USMCA review may prove less about rewriting trade rules, and more about restoring confidence in the stability of the ones that already exist.

As uncertainty surrounding the future of the USMCA persists, the greatest risk for supply chains isn't an impasse in trade talks, Hou says, but a prolonged period of negotiation that causes shippers to hold off on bookings, delay sourcing decisions, and add additional layers to inventory buffers to account for the increased risk of customs delays should the deal fall apart.

"These delays have a ripple effect throughout all aspects of the logistics process, including carriers, warehouses and trucking companies," he warns.

That uncertainty is already forcing shippers and logistics providers to prepare for a far more compliance-heavy environment well before negotiations formally begin, Hou notes. Expectations of tighter rules of origin for steel, automobiles and critical minerals are already driving companies to spend more time validating supplier declarations, he adds, while customs authorities are likely to step up origin and labor-content checks at the border, raising the risk of delays and congestion along major trade corridors. 

As a result, logistics providers are investing in new compliance systems and real-time visibility tools, while shippers are revisiting contracts to clarify tariff liability and build flexibility into routing decisions. For many companies, this review process is effectively a stress test for their supply chains, Hou says, and those able to stay compliant, maintain shipment visibility and adapt sourcing strategies quickly will be better positioned to absorb the costs.

The good news for companies longer term is that all three countries have strong incentives to preserve stability in North American trade, says Matt Lekstutis, director at supply chain and procurement consultancy Efficio.

"That shared interest increases the odds of compromise, even in a challenging environment," he adds.

Toward that end, negotiations will likely focus less on fully rewriting the structure of the USMCA, and more on reinforcing resilience within the deal's existing framework, Lekstutis predicts. That approach, he says, would likely emphasize deeper regional sourcing, greater transparency across supplier tiers, and measures to reduce the kind of reliance on single sources that left North American supply chains exposed during the pandemic, as well as in the wake of recent geopolitical shocks.

In sum, the outcome of the talks may matter less than the path taken to get there, with prolonged uncertainty posing its own set of costs. In that sense, the USMCA review will test not only the durability of North America's economic stability, but also the ability of governments and businesses to navigate political volatility without undermining the critical supply chains they depend on.