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Donald Trump’s Trade Policy and CUSMA: What Canada Should Know About the Pact’s Review

Donald Trump’s approach to trade policy is once again putting North American commerce under a spotlight. For Canada, the central question is not simply whether the Canada–United States–Mexico Agreement (CUSMA) will survive, but how much uncertainty businesses, workers and consumers may face while Washington reviews the continental trade pact.

CUSMA—known as USMCA in the United States and T-MEC in Mexico—governs a large share of trade between Canada, the United States and Mexico. It replaced the North American Free Trade Agreement (NAFTA) and has provided the framework for cross-border commerce since 2020.

Recent reports point to several possible paths ahead. Global News examined what could happen as the agreement’s review begins on July 1. CTV News reported that the continental trade pact would remain in place after the United States passed a key deadline. Reuters, meanwhile, reported on a potential U.S. declaration to leave the agreement and the long countdown that could follow.

Taken together, the coverage suggests that CUSMA is not disappearing immediately. However, the review could become an important test of Donald Trump’s “America First” trade policy and Canada’s ability to protect stable access to its largest export market.

Why CUSMA matters to Canada

The United States is Canada’s dominant trading partner, and the relationship is deeply integrated across manufacturing, energy, agriculture, transportation and retail.

Many goods cross the border more than once before reaching consumers. A vehicle, for example, may contain parts manufactured in several North American plants. Food products, industrial equipment, machinery and natural resources also move through highly connected supply chains.

That integration means even the possibility of new tariffs, border delays or stricter rules can affect Canadian companies before any formal policy takes effect. Businesses may delay investment, review suppliers or increase inventories simply because the rules appear less predictable.

For Canadian consumers, trade uncertainty can eventually influence prices and product availability. For exporters, the stakes are even more direct: access to the U.S. market can determine whether a product remains competitive.

CUSMA is therefore more than a trade agreement. It is part of the operating system for the North American economy.

What the latest reports say

The recent coverage presents three important developments.

The six-year review is approaching

Global News reported on the paths ahead as the CUSMA review is set to begin on July 1. The review is a scheduled process built into the agreement, rather than an automatic cancellation of the pact.

That distinction is important. A review gives the three governments an opportunity to assess the agreement, raise concerns and discuss changes. It does not, by itself, mean that CUSMA ends on the review date.

The review could nonetheless become politically significant if the United States uses it to press Canada and Mexico for concessions or to reopen provisions that Washington considers unfavourable.

The agreement remains in force after a key deadline

CTV News reported that the “continental trade pact” would stay in place as the United States moved past a key deadline.

For Canadian businesses, this is the most immediate practical point. The agreement’s legal framework continues to provide a basis for North American trade while the review process moves forward. Companies do not face an automatic overnight end to CUSMA solely because a deadline has passed.

That does not eliminate risk. A continuing agreement can still be surrounded by political pressure, tariff threats or demands for renegotiation. But stability under the existing framework gives companies more time to plan than an immediate termination would.

A possible U.S. withdrawal would not be instantaneous

Reuters reported on a U.S. declaration to exit USMCA and described it as starting a decade-long countdown for the pact.

This scenario requires careful interpretation. A declaration of intent to withdraw is not the same as the immediate cancellation of trade rules. As described in the Reuters report, such a step would begin a long process rather than instantly remove the agreement from North American commerce.

That potential timeline matters because it would create room for negotiations, legal analysis and political intervention. It could also keep businesses in a state of uncertainty for years, particularly if the United States signalled that preferential trade treatment might eventually be withdrawn.

A timeline of the current CUSMA uncertainty

The recent developments can be understood in the following sequence:

• CUSMA replaced NAFTA: The newer agreement became the foundation for North American trade after NAFTA was replaced.
• The agreement’s scheduled review approaches: Global News reported on the review set to begin on July 1.
• A key deadline passes without an immediate collapse: CTV News reported that the pact would remain in place after the United States passed the relevant deadline.
• Withdrawal remains a possible long-term scenario: Reuters reported that a U.S. exit declaration could trigger a decade-long countdown rather than an immediate end.
• The review period becomes the next major focus: Canada, the United States and Mexico face negotiations that could shape the agreement’s future.

The precise policy demands that Washington may bring to the table remain a central question. The verified reports establish the review, continued operation of the pact and the possible withdrawal mechanism. They do not, on their own, confirm the final outcome of negotiations.

How CUSMA fits into Donald Trump’s trade policy

Donald Trump has consistently treated trade policy as a tool for advancing broader economic and political goals. His approach emphasizes reducing perceived trade imbalances, protecting domestic industries and using market access as leverage in negotiations.

That approach can create a different relationship with trade agreements. Traditional trade policy often focuses on maintaining predictable rules over time. Trump’s strategy has more frequently linked trade access to political demands, enforcement concerns and domestic manufacturing priorities.

For Canada, this creates a difficult balance. The country benefits from predictable continental trade, but it must also respond to U.S. demands without damaging its own economy or provoking retaliatory measures.

The CUSMA review could therefore become a test of whether the agreement remains a stable long-term framework or becomes a recurring platform for political bargaining.

What the review could mean for Canadian industries

The effects will not be evenly distributed across the Canadian economy. Some sectors are particularly exposed to changes in CUSMA rules or to uncertainty surrounding the review.

Automotive manufacturing

The North American auto industry depends on integrated production. Parts and vehicles move between Canada, the United States and Mexico, often crossing borders several times.

Any change to rules of origin, labour requirements or tariff treatment could affect production decisions. Automakers may examine whether individual plants and suppliers still qualify for preferential treatment. Even small changes can have major consequences when a supply chain spans three countries.

Agriculture and food exports

Canadian farmers and food processors rely heavily on the U.S. market. CUSMA provides a rules-based structure for agricultural trade, but political disputes can still create uncertainty around market access, inspections and product standards.

Exporters may face additional costs if customs procedures become more complicated or if regulatory differences are used as a source of pressure.

Energy and natural resources

Canada’s energy and resource industries are closely connected to U.S. buyers, infrastructure and investment. A more confrontational trade environment could affect investment planning and the economics of cross-border projects.

The impact would depend on the specific measures proposed during the review. The verified reports do not establish that particular Canadian energy products will face new restrictions, so claims about sector-specific penalties should be treated cautiously unless confirmed by government or major news reporting.

Small and medium-sized businesses

Large corporations often have teams dedicated to customs, legal compliance and government relations. Small businesses may not have the same resources.

For smaller Canadian exporters, uncertainty can be especially expensive. They may need to verify product classifications, reassess documentation and monitor policy announcements while continuing to serve customers. Some may reduce U.S. sales or avoid expansion until the future of the agreement becomes clearer.

The immediate effects: uncertainty before legal change

The most immediate consequence of the CUSMA debate is likely to be uncertainty rather than an instant change in tariff treatment.

Businesses may respond by:

• Reviewing supply chains and alternative suppliers
• Checking whether products meet CUSMA requirements
• Increasing customs and legal support
• Delaying major investments
• Building more inventory near key markets
• Assessing whether production should be located in Canada, the United States or Mexico

Financial markets and currency traders may also react to headlines, even when no formal policy has changed. A statement from Washington can influence business expectations long before new rules are implemented.

Canadian governments may face pressure to provide clear guidance. Exporters need to know whether current CUSMA procedures remain valid, how the review will be conducted and what contingency plans are available if negotiations deteriorate.

For households, the near-term effects may be less visible. However, prolonged uncertainty can eventually affect investment, employment and prices in industries that depend heavily on cross-border trade.

Canada’s negotiating challenge

Canada’s position is shaped by both dependence and leverage.

The country depends on the United States for access to a huge consumer market, but the U.S. economy also benefits from Canadian inputs, customers and integrated production. Canadian negotiators can point to the mutual value of the relationship, particularly in sectors where supply chains cannot be easily relocated.

At the same time, Canada must avoid assuming that economic interdependence alone will prevent aggressive U.S. demands. The reports from Global News, CTV News and Reuters indicate that the agreement’s future is again becoming a major political issue in Washington.

Canada’s strongest negotiating position may involve a combination of diplomacy, evidence and preparation. That means documenting the value of bilateral trade, engaging directly with U.S. states and industries, and identifying where Canadian companies can diversify without undermining existing North American relationships.

What Canadians should watch next

Several signals will help clarify the direction of the CUSMA review.

The tone of official U.S. statements

Statements from the White House, the U.S. Trade Representative and other departments will indicate whether Washington sees the review as a routine assessment or an opportunity for fundamental renegotiation.

Canada’s response

The Canadian government’s messaging will matter. Ottawa will need to reassure businesses that the agreement remains operational while also preparing for difficult negotiations.

Mexico’s position

CUSMA is a three-country agreement. Differences between Canada, the United States and Mexico could make negotiations more complicated, while shared concerns could strengthen the case for preserving the existing framework.

Industry and regional lobbying

Auto manufacturers, farmers, retailers, transport companies and provincial governments are likely to push for certainty. Their public statements may reveal where the greatest pressure points are developing.

Any formal withdrawal notice

A formal U.S. declaration would be more consequential than a political comment or negotiating threat. Reuters’ report is significant because it highlights the possibility of a long withdrawal countdown. Whether such a step occurs, and what legal and political process follows, will be critical.

Future outlook: three possible paths

The CUSMA review could develop along several broad lines.

1. The agreement remains largely intact

The three countries may complete the review with limited changes. This would provide businesses with the greatest certainty and preserve the existing structure of continental trade.

Even in this scenario, governments could agree to clarifications or enforcement adjustments without rewriting the entire pact.

2. Targeted renegotiation

The United States could seek changes in specific areas while leaving the broader agreement in place. This outcome could produce a prolonged negotiation but avoid a full-scale trade rupture.

For Canada, targeted negotiations would still carry risks. A change in one sector could create indirect effects elsewhere, particularly if companies depend on shared supply chains.

3. A prolonged withdrawal dispute

A formal U.S. exit declaration could initiate the long countdown described by Reuters. That would create a period in which CUSMA technically remains relevant but businesses must prepare for a possible future without the same preferential framework.

This would likely be the most damaging scenario for investment confidence. Even if trade continued during the countdown, companies could hesitate to make long-term commitments in North America.

What this means for Canada

The latest CUSMA coverage points to continuity in the short term but uncertainty in the years ahead. The agreement remains in place, and the review process is not the same as immediate termination. At the same time, the possibility of a U.S. withdrawal declaration means Canadian policymakers and businesses cannot treat the issue as routine.

For Canada, the central objective will be preserving predictable access to the U.S. market while maintaining constructive relations with Mexico and defending Canadian economic interests.

The coming review will show whether Donald Trump’s trade policy uses CUSMA as a platform for adjustment or as leverage for a broader restructuring of North American commerce. Until negotiations produce firm results, the most accurate conclusion is clear: CUSMA continues to govern trade, but its long-term future is once again a major question for Canada.

Sources: Global News, “[What happens to CUSMA on July 1? The paths ahead as review set to begin”; CTV News, “Continental trade pact set to stay in place as U.S. blows past key deadline”; and Reuters, “US declaration to exit USMCA to start a decade-long countdown for the pact.”