Canada’s most important trade agreement is heading toward its first mandatory review. July 1 is the deadline for Canada, the United States and Mexico to complete a review of the Canada–United States–Mexico Agreement (CUSMA).
In Canada, this date is often framed as a hard deadline for renegotiating the agreement. But trade lawyers say this framing misses a key point.
“Unless the United States withdraws, the CUSMA agreement will stay in force for another 10 years,” said Alexander Hobbs, an international trade lawyer at Cassidy Levy Kent, an international law firm specializing in trade matters.
“We are not at risk of the agreement expiring in July. That’s not how this works.”
John Boscariol, a trade lawyer and partner at McCarthy Tétrault, said the 2026 review is best understood as a structural checkpoint rather than a do-or-die negotiation.
“On paper, this is not a point at which the agreement must be renegotiated, torn up or expired,” he said. “It’s a review among the parties to ensure it’s working the way they want it to work.”
But the 2026 review could still mark the beginning of a more volatile phase — one defined less by a single deadline than by years of uncertainty for Canadian exporters.
“If we can’t come to some agreement … we are going to review it the next year, and the next year, and the next year after that,” Boscariol said.
What the treaty requires
In 1994, Canada, the U.S. and Mexico entered the North American Free Trade Agreement (NAFTA). NAFTA has made North America one of the most integrated trading regions in the world, and led to trade among the three countries tripling.
NAFTA did not have an expiry date and did not require renewal. But in President Donald Trump’s first term, he initiated a review of the agreement, arguing it needed stronger rules on autos, labour and intellectual property, among other things.
This led to NAFTA being replaced, in 2020, by CUSMA, which is known in the U.S. as the USMCA. CUSMA has an initial 16-year term, meaning it expires 2036 unless otherwise renewed.
CUSMA requires the parties to meet every six years to review the agreement’s operation and decide whether to extend it. In this first review, the parties will decide whether to extend the agreement another 16 years from the review date, to 2042.
If one or more parties declines to confirm an extension, the agreement does not unravel. Instead, the structure of the review process changes.
“What changes really is that now, instead of meeting every six years, the parties are going to meet every year,” said Hobbs. “The [2036] deadline stays.”
The real risk
The review mechanism itself is not a legal cliff. The true worst-case scenario lies elsewhere: withdrawal.
“There’s a withdrawal mechanism … and it allows any party at any time to signal that they want to withdraw from the CUSMA,” Hobbs said.
That mechanism requires a party to provide just six months’ notice of its plans to withdraw.
“ Certainly, any party could withdraw at any time,” said Boscariol. However, any attempt to do so by the Trump administration would likely collide with domestic legal and political constraints.
“That could trigger all kinds of constitutional issues around whether Congress has to approve,” he said.
“One example is with rules of origin,” said Boscariol. “Right now, the customs laws in the United States provide that Canadian product that meets the rules of origin under the CUSMA can enter the U.S. duty free. Those are domestic laws that would have to change if the U.S. were to withdraw.”
Because of those constraints, Boscariol said the more plausible scenario is not sudden withdrawal, but sustained pressure through the review process itself.
The United States could use the review — and any subsequent annual reviews — to push for concessions in specific areas, says Boscariol, including automotive rules of origin, dairy market access and digital trade provisions.
In that scenario, Washington could decline to confirm an extension in 2026 and instead use the annual review as an ongoing source of leverage.
“That’s not great for Canadian business,” Boscariol said. “But that’s a real possibility here — uncertainty as to whether we truly have the guarantees of the CUSMA here in place for Canadian businesses or investors … looking for a stable environment.”
Hobbs raises a related concern: even if concessions are made and the text is revised, compliance is not guaranteed.
“People are no longer looking at the CUSMA as a binding instrument,” he said, pointing to instances where the United States has taken actions that appear inconsistent with the agreement.
Balancing act
For Canadian industry, Boscariol warns that uncertainty could become the new normal.
“I do think it’s a mistake to view [the CUSMA review] as a singular event,” he said. “I think this is an ongoing process that we’re going to have to deal with over the next 10 years.”
The stakes for Canada are significant. Canadian merchandise exports to the U.S. totalled nearly $550 billion in 2024, accounting for about three-quarters of total exports.
Hobbs says Ottawa faces a strategic dilemma: whether to offer concessions now, knowing the current U.S. administration may be difficult to satisfy, or to delay major trade-offs in the hope of a more favourable negotiating environment later.
“It’s a question of [whether] Canada even wants to give any concessions to the United States, knowing that the agreement is likely to be in place … for another decade,” he said.
Boscariol says companies expecting the 2026 review to deliver long-term certainty “may be disappointed.” He urges firms to prepare for continued volatility in access to the U.S. market.
That uncertainty is one reason Ottawa has encouraged diversification beyond the United States into Asia, says Boscariol.
Yet that expansion carries different compliance and regulatory challenges.
“These markets have very different risk profiles than the United States,” said Boscariol. “ And it has been sometimes challenging, but overall more comfortable to deal with U.S. customers and counterparties than those in many of these other countries.”
