A New Chapter for North American Trade

The United States' decision to decline a 16-year extension of the USMCA triggers an annual review process, shifting North American trade from a stable, rules-based framework toward a more discretionary, sector-specific approach tied to industrial policy. While the agreement remains fully enforced until 2036, this transition introduces prolonged uncertainty for corporate investment and highlights a growing structural divergence between Canada and Mexico. Mexico is increasingly integrated into high-growth US tech supply chains, supplying 35% of IT hardware and 50% of server imports, while Canada’s export base in metals and energy faces heightened scrutiny under strategic trade measures like Section 232 tariffs. Consequently, trade policy has evolved into a recurring negotiation rather than a settled framework, with bilateral talks between the U.S. and Mexico progressing more substantively than those with Canada.