USMCA: Review Begins Amid Tensions, Unlikely to be Dismantled According to Coface
According to Coface, the official review of the North American trade agreement that started on July 1, 2026, is expected to be particularly tense, especially regarding automotive origin rules and market access. However, the deep industrial integration between the three countries makes a complete dismantlement of the USMCA unlikely.
Renegotiation Launched in a Context of Escalating Trade Tensions
The official opening of the first review of the USMCA on July 1, 2026, occurs under high tension. Coface highlights that the Trump administration wishes to renegotiate several key provisions of the treaty that came into effect in 2020: automotive origin rules, trade relations with China, access to the Canadian dairy market, and certain Mexican energy policies. Faced with these demands, Mexico and Canada are holding their ground, suggesting long and complex negotiations ahead. Marcos Carias, North America economist at Coface, notes that this review was supposed to be a simple update exercise before turning into a major issue.
Value Chains Too Integrated to Dismantle
Coface emphasizes the deep industrial interdependencies that have developed among the three partners. Since the USMCA came into effect, total trade between the United States and Canada on one hand, and Mexico on the other, has increased from about 615 billion USD in 2019 to nearly 800 billion USD in 2022, thus surpassing China as the main trade partner. Canada and Mexico supply 51% of vehicles and 58% of automotive parts imported by the United States. Some automotive components cross the US-Mexico border five to seven times before final integration. In energy, Canada accounts for 60% of US crude oil imports. These exports to the United States also weigh heavily on local economies: 30% of Mexico's GDP and 17% of Canada's GDP.
Total Withdrawal Unlikely Despite Tensions
Although the current positions seem difficult to reconcile and the initial preparatory exchanges have not reduced the divergences, Coface believes that a complete dismantlement of the agreement remains unlikely. Such a scenario would cause major disruptions for North American supply chains and the three economies. The Coface expert believes that a pragmatic compromise remains the most credible outcome, relying on targeted concessions that allow each party to preserve its strategic interests while maintaining a privileged framework for regional trade. Discussions could extend until 2027. Even in the event of a formal deadlock, Canada and Mexico are expected to maintain some form of preferential market access to the American market due to the prohibitive economic cost of a break for all three nations.
