- The United States is not expected to extend the current cycle of the USMCA, which means the agreement's sunset clause will officially be triggered, leading to a decade-long period of uncertainty in North American trade arrangements.
- The agreement will not terminate immediately, but annual reviews and renegotiations in the future will continue to affect manufacturing investments, supply chain layouts, and policy games among the three countries.
- The proportion of automobile origin, protective arrangements against Chinese goods, and tariffs on steel, aluminum, and automobiles have once again become the most sensitive core issues in the trilateral negotiations.
Sunset Clause Brings Uncertainty Forward
The USMCA was originally designed as a framework for periodic review and renewal. Now, with the U.S. choosing not to confirm an extension in advance, it effectively places institutional uncertainty in front of businesses and capital markets. Manufacturers need to reassess cross-border capacity allocation for the next decade.
Automotive Industry Will Be the First to Bear the Brunt
The North American automotive supply chain is highly integrated, with parts shuttling back and forth among the three countries. If the origin threshold is further raised, both automakers and parts companies may face rising costs, more complex certification, and delayed investment decisions.
Tariff Disputes Undermine Agreement Stability
Even though the USMCA still exists, the U.S. has taken a tougher tariff stance on some Canadian and Mexican automotive, steel, and aluminum products, weakening the agreement's role as a stable trade anchor and prompting Canada and Mexico to more actively seek to revise the new agreement.
Negotiation Window Not Completely Closed
Follow-up negotiations between the U.S. and Mexico have been arranged, and Canada has also emphasized its desire to form a new agreement. The real risk is not that the agreement will expire tomorrow, but that over the coming years, businesses will endure higher strategic uncertainty amid repeated negotiations and policy swings.
