US Trade Chief Flags 2026 USMCA Exit Risk Amid Political Uncertainty
Katherine Tai's warning puts a spotlight on the trade pact's upcoming review, raising concerns for North American auto and agriculture sectors.
U.S. Trade Representative Katherine Tai has issued a stark warning against complacency over the United States-Mexico-Canada Agreement (USMCA), signaling that the pact’s scheduled 2026 review could become a flashpoint for significant economic and political uncertainty, particularly with a potential change in the White House.
Speaking at a forum, Tai emphasized that the U.S. and its neighbors should not grow "too comfortable" with the trade deal that governs more than $1.8 trillion in annual commerce. She suggested that maintaining "a certain level of discomfort" and "uncertainty" would be crucial for a successful and rigorous re-evaluation of the pact, according to remarks reported by CBC News. Her comments come as industries and investors begin to model the potential impact of the upcoming U.S. presidential election on international trade policy.
The USMCA, which replaced the North American Free Trade Agreement (NAFTA) in 2020, includes a provision for a "joint review" every six years, with the first set to occur on July 1, 2026. This mechanism requires all three countries to affirm their commitment to the deal; otherwise, it could be terminated. This review was a key demand from the Trump administration during the initial negotiations, designed to prevent the pact from becoming outdated.
The stakes for the North American economy are immense. The trilateral trade relationship is one of the world's largest, with total trade growing by over a third since the USMCA's implementation. Integrated supply chains, particularly in the automotive and agriculture sectors, are deeply reliant on the tariff-free movement of goods across the continent.
For the auto industry, which supports approximately 5 million jobs across the region, any disruption to the USMCA could be catastrophic. Mexico produced 4 million vehicles in 2023, with nearly 80% of its exports destined for the United States. The pact’s stringent rules-of-origin requirements have further entwined the manufacturing processes of the three nations. A potential withdrawal could snap these supply chains and lead to higher costs for both producers and consumers.
Similarly, the agricultural sector has seen a significant boost under the agreement. U.S. agricultural exports to Canada and Mexico have surged, with the two countries now accounting for nearly a third of all U.S. farm product exports, reaching a combined $58.7 billion in 2024. Analysis from the Center for Strategic and International Studies (CSIS) highlights that a reversion to pre-agreement tariffs would severely harm farmers and ranchers who have built their business models around a unified North American market.
Former President Donald Trump, who has confirmed his 2024 presidential candidacy, has a well-documented history of using tariffs as a primary policy tool and has frequently threatened to withdraw from trade deals he views as unfavorable to the U.S. While he championed the creation of the USMCA to replace what he called "the worst trade deal ever made" (NAFTA), his administration's focus on an "America First" agenda suggests that all existing agreements could face scrutiny.
Economists have warned that a U.S. withdrawal could trigger a severe economic shock. Some projections suggest a U.S. withdrawal could reduce U.S. GDP growth by 0.25% and lead to the loss of over 400,000 American jobs if Canada and Mexico retaliate with their own tariffs. The impact on the more trade-dependent economies of Canada and Mexico would likely be even more severe. Business groups, including the U.S. Chamber of Commerce, have already begun lobbying for a smooth review process, emphasizing the certainty and stability the USMCA provides for long-term business investment. As the 2026 review date approaches, corporations with North American operations will be forced to plan for a range of outcomes, introducing a new layer of risk into the global economic outlook.