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The wheels officially are in motion to begin the upcoming July 2026 “joint review” of the United States-Mexico-Canada Agreement (USMCA), as the public consultation process kicks off in all three countries, with stakes as high as the border tensions that flow.

The USMCA (or “CUSMA” as it is called in Canada) entered into force in July 2020, replacing the North American Free Trade Agreement (NAFTA) that had been in force since January 1994. Article 34.7 mandates that the USMCA parties review the agreement every six years, which will be in July 2026. At that stage, the agreement may be amended.

As part of that six-year review, if all parties agree, the terms of the USMCA/CUSMA will extend for another 16 years, with the next six-year review to occur in 2032. If any party does not wish to extend the Agreement, however, a joint review will be held annually for the remainder of the term of the agreement. Another possible outcome are bilateral arrangements in the event that one or more countries withdraw.

Currently, the Office of the U.S. Trade Representative (USTR) is accepting written comments on the USMCA’s operation, implementation, and any potential compliance issues the agreement creates. USTR will hold a public hearing Nov. 17, followed by an opportunity to submit post-hearing rebuttal comments, due seven days after the last day of the public hearing.

The government of Mexico and the government of Canada opened their public consultation processes as well. As with the United States, Canada’s government is accepting written comments through Nov. 3. Mexico’s public comment period closes Nov. 16.

High stakes

How USMCA/CUSMA talks play out with Canada and Mexico are critical, as these countries are the United States’ biggest trading partners. In 2024, two-way trade on goods totaled an estimated $935.1 billion with Mexico, and an estimated $909.1 billion with Canada, according to the USTR.

The most heavily impacted goods include vehicles, electrical machinery, machinery, energy products, medical devices, plastics, and a wide variety of agricultural products – fruits, vegetables, dairy, cotton, livestock products, and more.

For in-house counsel and compliance officers in industries and within companies whose operations rely on cross-border trade with Canada and Mexico, the public consultation process is a critical time to provide insight on:

• Any compliance issues or concerns posed by the USMCA/CUSMA;
• Recommendations for specific actions that USTR should propose to promote balanced trade, new market access, and alignment on economic security with Mexico and Canada;
• Factors affecting the investment climate in North America and the effectiveness of the USMCA in promoting investment that strengthens U.S. competitiveness, productivity, and technological leadership; and/or
• Strategies for strengthening North American economic security and competitiveness, including collaborative work under the Competitiveness Committee, and cooperation on issues related to non-market policies and practices of other countries.

What hangs in the balance for the legal and compliance community, particularly, is regulatory certainty – the kind of regulatory certainty that directly impacts not just strategic operations, like contingency planning and whether to seek alternative suppliers, but legal and compliance issues, like M&A deals, vendor contracts, and areas of focus pertaining to third-party risk management.

Newly imposed tariffs

The upcoming USMCA/CUSMA joint review comes during a time when the only thing certain is uncertainty, as U.S. President Donald Trump continues to expand, adjust, or retract tariffs – in no particular order. Below is a summary of newly imposed tariffs that could impact tariffs in relation to Canada and Mexico.

MHDV tariffs: Effective Nov. 1, the Trump administration imposed a new ad valorem 25% duty on medium- and heavy-duty vehicles (MHDVs) and MHDV parts, and a 10% ad valorem duty on buses. MHDV imports that qualify for preferential tariff treatment under the USMCA are eligible to apply the 25% duty only to the value of the MHDV’s non-U.S. content, once the Secretary establishes a process for applying that calculation and publishes a notice in the Federal Register.

Imports of MHDV “knock-down kits or equivalent parts,” as determined by U.S. Customs Border Protection (CBP), will continue to be subject to the additional ad valorem duty rate “regardless of USMCA preferential treatment qualification,” a White House proclamation states.

The proclamation further states that MHDV manufacturers can apply for an import adjustment offset amount “equal to 3.75 percent of the aggregate value of all MHDVs assembled in the United States by that manufacturer,” as determined annually by the Secretary, from Nov. 1, 2025, through Oct. 31, 2030.

Steel and aluminum tariff adjustments: Aluminum or steel producers that operate production facilities in Canada or Mexico and supply U.S. auto or MHDV manufacturers may be eligible for a 25% tariff, instead of the Section 232 50% tariff on aluminum and steel. Rate adjustments are limited to USMCA-preferential imports and newly committed U.S. production capacity.

Timber, lumber, and derivative product tariffs: Effective as of Oct. 14, 2025, imports of “softwood timber and lumber” are subject to a 10% ad valorem duty; “certain upholstered wooden products” are subject to 25%; and “completed kitchen cabinets and vanities,” and related parts, are subject to 25%. Starting Jan. 1, 2026, the duty rate for upholstered wooden products will increase to 30%, and for kitchen cabinets and vanities to 50%, except for countries with which the United States reaches an agreement.

Section 232 and other tariffs: Other tariffs include a 35% tariff on non-USMCA-compliant goods, a 10% tariff on non-USMCA-compliant potash and energy products, 50% tariffs on steel, aluminum, and copper, and a 25% tariff on non-U.S. manufactured vehicles. Goods valued at $800 or less are no longer subject to de minimis treatment.

Bilateral trade negotiations

Parallel to the tariffs, ongoing bilateral trade negotiations with Mexico and Canada continue. On Oct. 27, President Trump and Mexico’s President Claudia Sheinbaum agreed to extend for several more weeks a Nov. 1 trade deadline to allow more time to negotiate a new bilateral trade deal.

In a press conference, President Sheinbaum said that 54 trade barriers are still on the negotiating table but that a deal was close to being reached. Some of those trade barriers could directly impact the USMCA’s joint review.

The USTR’s 2025 “Foreign Trade Barriers” report, published in March 2025, provides a good indication of specific trade barriers being negotiated. Pertaining to Mexico, trade barriers generally include issues relating to agriculture, energy, and intellectual property.

Canada’s footing with the United States stands on shakier ground, after the government of Ontario aired a commercial featuring an April 1987 radio address by former U.S. President Ronald Reagan. The aim of the commercial was to protest U.S. trade policy.

Referring to the ad as “false” and calling it a “hostile act,” President Trump posted on Truth Social: “I am increasing the tariff on Canada by 10% over and above what they are paying now.” He also posted, “Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED.”

Ultimately, bilateral agreements could replace the USMCA. Canada’s Prime Minister Mark Carney and Mexico President Sheinbaum already have moved forward with a bilateral partnership of their own, with the Sept. 18 announcement of the “Comprehensive Strategic Partnership.”

The Canada-Mexico Action Plan 2025-28 serves as the roadmap for carrying out concrete actions, “including collaboration on trade and investment facilitation and port connectivity, as well as promoting cooperation on agriculture, energy, natural resources, health, security, emergency preparedness and climate action,” Prime Minister Carney and President Sheinbaum said in a joint statement.

One thing is certain: The July 2026 USMCA joint review will be the ultimate litmus test as to whether President Trump is committed to maintaining the United States’ long-standing trading partnership with its largest trading-partner neighbors, or whether the United States will end up on an island all its own.