The United States biggest trade deal is under scrutiny in Washington this week as policy makers, economists and industry representatives crowd into a three day hearing on the future of the United States-Mexico-Canada Agreement or USMCA.
With the pact’s first formal review due in 2026, witnesses are warning that President Donald Trump’s aggressive tariff strategy is undermining the agreement and are urging his administration to drop levies on Canadian and Mexican goods.
The Office of the U.S. Trade Representative convened the public hearing as part of the mandatory joint review built into USMCA. Under that clause, the United States, Canada and Mexico must state by July 1, 2026 whether they want the accord to continue.
If any government refuses, USMCA enters a rolling renewal process and can ultimately lapse in 2036, injecting a decade of uncertainty into North American supply chains.
In an interview this week, Trump’s trade chief Jamieson Greer stated that the president may decide as early as next year whether to withdraw the United States from the agreement. Trump has frequently pondered whether to let it expire or replace it with separate bilateral agreements.
In written submissions and in person testimony, hundreds of U.S. business groups have urged the administration to preserve the USMCA, known as CUSMA in Canada and to roll back tariffs that now apply to large parts of continental trade.
Major business organisations told USTR the deal should be extended and that duties on Canadian and Mexican goods should be removed, arguing that the levies are hurting competitiveness without delivering lasting security gains.
According to USTR’s agenda and trade press reports more than 100 witnesses are scheduled over three days, including representatives of major business associations, agricultural exporters, labour unions, think tanks and a handful of members of Congress.
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They have been invited to spell out their vision for the future of the USMCA ahead of next year’s review deadline.
Early this year, Trump imposed sweeping tariffs of about 25% on most imports from Canada and Mexico and 10% on many energy products, citing illegal migration and fentanyl trafficking as national security threats.
Canada and Mexico responded with retaliatory measures and accused Washington of breaching the spirit and letter of USMCA.
After a market shock and intense lobbying, the White House carved out partial relief, temporarily exempting many USMCA compliant goods from the tariffs.
Even so, a significant share of cross border trade remains exposed and firms now face added paperwork and legal risk as they race to ensure shipments qualify under the pact’s detailed rules of origin.
Canada’s manufacturing purchasing manager index fell deeper into contraction territory in November with survey providers citing trade frictions and delayed orders tied to U.S. tariff policy and the uncertain outlook for USMCA.
An International Monetary Fund assessment released this week concluded that Canada has fared better than many feared under Trump’s tariffs but added that exemptions under the continental trade deal have played a key role in cushioning the blow.
Analysts warn that the damage could be much greater if the agreement itself were put at risk. USMCA governs roughly $2 trillion in annual trade among the three countries and has helped shift supply chains out of China, according to research from the Peterson Institute for International Economics and the Council on Foreign Relations.
A disorderly end to the pact or a prolonged standoff over tariffs, would hit sectors from autos and energy to agriculture and digital services, and could complicate North America’s efforts to present a united front in strategic competition with Beijing.
The Canadian dollar is trading around 1.39 per U.S. dollar, little changed as the USMCA hearings got under way in Washington though trade exposed sectors and auto manufacturers have already weathered several bouts of volatility this year in response to tariff headlines.
USTR officials say the hearing record, along with written submissions will feed into a detailed report on the agreement’s performance that is due by mid 2026.
They want the administration to signal that North America’s trade framework will endure and that tariffs on close allies will not become a permanent feature of U.S. policy.
Whether Trump is prepared to trade tariff leverage for predictability remains the unanswered question hanging over the room.
