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As the US-Canada trade war escalates, experts warn that Canada could lose up to 100,000 jobs and face a recession if the USMCA collapses. With tariffs rising on both sides, key sectors like autos and manufacturing are bracing for severe pain.
As the USMCA enters its first mandatory joint review on July 1, analysts warn that the odds of renewal are fading due to U.S. President Donald Trump’s unpredictable stance, raising concerns about prolonged economic instability for businesses across North America. If not renewed, the trade deal will face annual reviews until 2036, creating persistent uncertainty. Trump has signaled he may not support renewal, while Canada and Mexico push to preserve the pact that shields much of their trade from his tariffs.
Canada has sent a letter to the U.S. and Mexico proposing a 16-year extension of the USMCA trade deal while seeking parallel negotiations on sectoral tariffs. The move comes ahead of a meeting between Canadian and U.S. trade negotiators on Tuesday, amid criticism that Canada has been slow to engage in the review process. If all three countries do not agree to an extension, the deal will shift to an annual review mechanism until 2036.
The U.S. has proposed raising regional content requirements for North American-built cars to 82%, with 50% from U.S. production, while Canada has been excluded from USMCA talks in Mexico City. Canada's economy has contracted for a second consecutive quarter amid tariff turmoil, and Ottawa is strengthening trade ties with China. Prime Minister Carney has called for a new partnership with the U.S., but warned that a country lacking self-sufficiency is not truly sovereign.
