July 1 is a date that Canadians look forward to every year. It’s Canada Day, and typically packed with family gatherings, barbecues, and fireworks to celebrate our country’s history and heritage. This year, July 1 will take on a different meaning for many in Canada’s political, trade, and business communities. For sure, it will feature a “family gathering” of sorts. It may include food. And it may also include “fireworks” of the diplomatic, trade policy, and social media kind, as representatives from Canada, the U.S., and Mexico are expected to meet to review the Canada-US-Mexico Agreement (CUSMA).
Much has been made of this July 1 meeting, with many wondering what it means and what might happen to the CUSMA itself on July 2. This note projects what the July 1 meeting is likely to involve. It will also set out a path forward for North American trade, making recommendations for how you can best continue to navigate the current trade environment.
Breaking Down the July 1 Meeting
When CUSMA officially came into force on July 1, 2020, it had a set termination date of July 1, 2036. However, it also included a “review and extension” clause, allowing the three countries to extend the Agreement beyond 2036 to 2042. As part of this clause, the three countries agreed to meet to conduct a “joint review” of CUSMA on July 1, 2026. This review would allow all three countries to assess whether CUSMA was working “as intended,” allowing them to determine the next steps in terms of governing North American trade. In that sense, the July 1, 2026, meeting is a “pre-planned structural check-in” rather than a drop-dead date for CUSMA’s future.
The heads of government in all three countries are required to provide a written submission ahead of, or on, July 1, 2026, indicating whether their country intends to extend CUSMA for an additional 16 years. Should one country signal that it does not want to extend CUSMA on July 1, 2026, all three countries will meet annually to review the Agreement until they agree to extend it for another 16 years (or until the Agreement expires in 2036). The bottom line: regardless of whether the parties agree to extend CUSMA during the July 1 meeting, CUSMA will remain in place until 2036.
The only way for CUSMA to not remain in place until 2036 would be for a country to trigger CUSMA’s withdrawal clause. This clause requires a country to provide notice of its withdrawal to the two other countries six months ahead of the official withdrawal date. This means that even if a country notifies of its intention to withdraw from CUSMA on July 1, the agreement will remain in place until January 1, 2027. It is highly unlikely and not anticipated that any country will choose to invoke the withdrawal clause on July 1.
Trade officials from all three countries are currently scheduled to hold a virtual meeting on July 1. Therefore, expectations are low for what could be achieved. Canada and Mexico have already indicated that they want CUSMA to continue and would like to see a review process unfold on a trilateral basis to renew its terms. As of yet, the U.S. has not given any official or definitive indication of what it wants to see happen on July 1, but U.S. actions suggest that it is unlikely for the country to support a renewal. In that sense, many expect that the July 1 meeting is not likely to amount to much beyond an agreement to continue negotiating for the duration of CUSMA. It could come and go without much “family togetherness,” food, or fireworks. As such, the meeting should be seen as a marker in time, and not determinative for the future.
Priorities Beyond July 1: The U.S., Canada, and Mexico
The United States:
As noted above, the U.S. has not yet formally clarified its official position for what it wants beyond July 1. President Trump has been hot and cold toward CUSMA, threatening to terminate the Agreement one week but stating he will consider reviewing it the next. His Administration remains intent on restructuring North American economic integration around an “America First” model. Its priorities include stricter rules of origin, greater U.S. content in manufacturing (especially autos), expanded access to Canadian supply‑managed sectors, and mechanisms to prevent Chinese goods from entering the U.S. via Canada or Mexico. Nevertheless, even in the face of damaging tariffs on Canadian goods, it has continued to allow most CUSMA-compliant goods to enter the U.S. tariff-free, tacitly demonstrating the value of the Agreement to businesses on both sides of the U.S. border.
In parallel, the U.S. Trade Representative (and chief trade negotiator), Jamieson Greer, has been more forthcoming in the past few months. In April, he engaged in a fireside chat with an American think tank where he indicated that the U.S. has two options for July 1: (1) rubber-stamp the Agreement to allow it to continue for another 16 years, or (2) renegotiate and improve the Agreement before committing to extend it. Since then, Ambassador Greer has repeatedly announced that the U.S. would like to review and renegotiate CUSMA. Ambassador Greer has also indicated that the U.S. intends to do this trilaterally, alongside Canada and Mexico, as well as bilaterally with each country in turn. The bilateral discussions, he has indicated, would focus on solving individual trade irritants with each partner.
As has been the case with all the deals made under the second Trump Administration, the deals that the U.S. plans to make with Canada and Mexico will likely still include tariffs, albeit at a lower rate than what is currently leveraged. It is also expected that the U.S. negotiators intend to make a deal with Canada and Mexico that does not require Congressional approval. While bilateral discussions have gotten underway with Mexico, little progress has been made in official negotiations. Informal discussions with Canada are currently taking place behind the scenes.
Canada:
Canada’s strategic objective beyond July 1 is clear: we want to preserve certainty and maintain preferential access to the U.S. market under CUSMA, given the high degree of integration across North American supply chains. This includes maintaining the CUSMA’s current terms, extending them beyond 2036 to 2042, and restoring economic and trade stability in the wake of U.S. tariffs and threats against Canadian exports and sovereignty. Canada also wants to preserve better terms of market access to the U.S. market than our global competitors have; this preferential access is a critical factor as Canadian businesses continue to export to the U.S. and make production and investment decisions at home. However, Canada has repeatedly stated that it will not sign a bad deal for the sake of having a deal, suggesting that the country is not in a rush to finalize an agreement with the U.S. unless it is in the economic interest of Canada.
Mexico:
Like Canada, Mexico’s strategic objective in the CUSMA review is to maintain the Agreement. While Mexico is open to improving the existing mechanisms and reducing frictions within the Agreement, it does not want to see substantial changes to current provisions. Despite having a secondary trade relationship with Canada through the Comprehensive and Progressive Trans-Pacific Partnership, Mexico has committed to pursuing a trilateral deal due to the benefits that CUSMA provides all three North American countries.
The Result:
We expect discussions to continue between Canada, Mexico, and the U.S. on both trilateral and bilateral bases in the weeks and months to come. Trade agreements cannot be reviewed or renegotiated overnight. CUSMA is complex and reaches far beyond tariff deals alone. It is useful to remember that the three countries collectively control the process. Therefore, even if the July 1 meeting does not amount to much (or anything), CUSMA will remain, and the review or renegotiation process will continue. While this creates further uncertainty for Canadian businesses, it also may present some opportunities for Canadian trade negotiators, particularly as discussions between the three countries drag into the fall and a new Congressional election cycle.
Even if the “worst case scenario” were to prove true beyond the July 1 meeting, and the U.S. Administration were to follow through on President Trump’s threat to withdraw from CUSMA altogether, Canada and the U.S. could still agree to use their current bilateral free trade agreement as a “base” for a future trade relationship. Both scenarios – a “U.S.-less CUSMA” or a return to a bilateral Canada-U.S. trade arrangement – require Congressional approval. As a result, either scenario is likely to be extremely complicated and politically charged, given current opinion polls and indications that the Republicans could lose seats in both houses of Congress. Furthermore, officials in Congress and the White House will remain under increasing political pressure as most American businesses want continuity and stability within CUSMA’s existing framework. Case in point – the U.S. Administration recently reduced tariffs on specific steel and aluminum derivatives from Canada and Mexico, given the demand for them in the U.S.
Navigating The CUSMA Review Beyond July 1
Following July 1, the trade climate will continue to be fragmented, unstable, and difficult to navigate for weeks and months to come. While we appreciate the uncertainty that this causes and the challenges it continues to pose to businesses, it is important to take the U.S. Administration’s rhetoric with a grain of salt. In its efforts to secure a “deal” on its own terms, the U.S. Administration will likely continue to flood the media with misinformation and threats as a negotiation tactic. Against this backdrop, Wellington Advocacy remains available to answer questions and provide guidance on CUSMA, Canada–U.S. relations, and the broader North American trade landscape.
During the ongoing review process, our advice for businesses is to actively engage with the government, industry associations, and stakeholders across North America. Broad engagement helps businesses to advance their interests, while identifying emerging barriers, opportunities and policy developments that could impact day-to-day operations. Engagement with the Government of Canada can help to ensure that negotiators are informed by data- and evidence-based perspectives, allowing your business’s priorities to be reflected in Canada’s negotiating position. Provincial governments can also be valuable partners, as they play a role in CUSMA discussions and can work as helpful partners with their counterparts in the U.S. and the federal government. Finally, maintaining dialogue with industry and government stakeholders in the United States and Mexico can foster awareness of shared priorities and enhance advocacy efforts throughout the review process.
Following July 1, the next deadline that could test the trilateral relationship is July 24, 2026. This date represents the expiry deadline for the Section 122 tariffs, which currently levy a 10% tariff on all goods with a CUSMA carve-out. Once the Section 122 tariffs expire, the U.S. is expected to levy tariffs under a new authority, likely using the Section 301 investigation into forced labour to levy new 10% tariffs on Canada and Mexico. Although it is expected that any Section 301 tariffs will include a CUSMA exemption, the imposition of new trade measures always risks creating friction and may further complicate the broader review and negotiation process.
Conclusion
Despite the attention surrounding the July 1 review, businesses should view it as the beginning of a longer process rather than a decisive moment for North American trade. CUSMA will remain in force until at least 2036, regardless of the outcome of the meeting on July 1. The months ahead are likely to feature continued negotiations, periodic trade irritants, and ongoing political rhetoric, but they will also present opportunities to shape the future of the Agreement. For Canadian businesses, the most effective strategy is to remain informed, engaged, and proactive, ensuring that their interests are reflected as Canada, the United States, and Mexico chart the next chapter of North American economic integration.
