On July 1, 2026, representatives of the Canada–United States–Mexico Free Trade Commission held the first mandatory six-year joint review of the Canada–United States–Mexico Agreement (“CUSMA”). This milestone was anticipated: the three parties were required to indicate whether they wished to extend CUSMA for another 16 years.
Prior to this meeting, Canada and Mexico had expressed their intention to renew the CUSMA. The United States, however, refused to renew it in its current form. Consequently, the agreement has not been extended at this time.
This outcome does not, however, bring the USMCA to an end. The agreement remains in effect until 2036, unless it is subsequently renewed or a party withdraws with six months’ notice.
In practical terms, the current measures therefore remain in effect. The review on July 1 does not automatically trigger new tariffs or an immediate change in the tariff treatment applicable to businesses. Canadian goods that meet the USMCA’s rules of origin can continue to benefit from the preferential treatment provided under this agreement.
This protection remains significant. A substantial portion of Canadian exports to the United States remains covered by the USMCA, which helps limit Canada’s overall tariff exposure. Against a backdrop marked by the imposition of various U.S. tariff measures, the USMCA therefore continues to play a central role for Canadian companies engaged in North American trade.
However, this coverage is not absolute. Certain U.S. sector-specific duties, particularly those based on Section 232 on national security grounds, may continue to apply to Canadian products, even when they comply with the USMCA’s rules of origin. The steel and aluminum sectors thus remain particularly vulnerable.
In the absence of a unanimous renewal, the parties will now continue discussions through annual reviews. If no renewal occurs before 2036, the agreement will expire at that time. This mechanism therefore places the USMCA in a prolonged negotiation phase, where the rules remain in effect but their future evolution becomes more uncertain.
This uncertainty alone can disrupt markets. Even without an immediate change in the rules, companies may hesitate to invest or enter into commercial commitments. The annual reviews could also become a means for the United States to exert pressure, particularly to demand concessions on digital trade or the treatment of inputs from non-market economies.
For businesses, the immediate challenge is therefore not a breakdown of the North American trade framework, but rather increased uncertainty in the medium term.
In short, the USMCA remains fully in force and continues to protect a significant portion of trade between Canada, the United States, and Mexico. However, its future is now subject to an annual negotiation process that could be used as a tool for trade and political leverage. Canadian businesses will therefore need to balance stability, legal vigilance, and strategic preparedness.
