U.S. Declines to Renew CUSMA at First Joint Review: What Businesses Need to Know

On July 1, 2026, the United States declined to confirm its renewal of the Canada–United States–Mexico Agreement (CUSMA) during the agreement’s first joint review.

While the decision has attracted significant attention, CUSMA remains in force for the remainder of its existing 16-year term, until at least July 1, 2036. Canadian businesses retain the same preferential access to U.S. and Mexican markets as before.

The non-renewal triggers an annual joint review process under Article 34.7.4 of CUSMA, which will recur each year until the parties either agree to an extension of the agreement or it expires in 2036.

What is the CUSMA Annual Review Process?

Under Article 34.7 of CUSMA, the parties were required to conduct a joint review of the operation of CUSMA on the agreement’s sixth anniversary (July 1, 2026). If all three countries agreed to extend the agreement, CUSMA would receive a new 16-year term, and the next review would occur 6 years later.

Canada and Mexico had both indicated their intention to renew CUSMA for a further 16-year term prior to the first joint review.

Because the U.S. did not support renewal, the parties now enter a process of annual reviews and negotiations. These reviews provide a formal forum to discuss concerns and decide on any appropriate actions.

Recurring issues such as trade imbalances, steel and aluminum, automotive rules of origin, tariffs and forced labour, and restrictions on Chinese inputs can be expected to centre those discussions.

If the parties subsequently reach agreement during any annual review, CUSMA can be renewed for a further 16-year term.

What Businesses Should Know

• CUSMA remains in force to the same extent as previously and will continue to govern commercial exchanges.
• There are no immediate changes to market access or tariff treatment for qualifying goods, and existing customs procedures, certification of origin requirements, and rules of origin remain unchanged by the non-renewal of CUSMA.
• The decision on whether to extend CUSMA for a further 16-year term may take place at any time under Article 34.7.5 of CUSMA.
• Annual reviews will become an important forum for negotiations, with the potential to amplify disputes and create greater uncertainty for long-term investment and supply-chain planning.
• Automotive, manufacturing, steel, aluminum, lumber and supply-chain dependent sectors may face increased scrutiny and discussion during annual reviews. Canada has identified U.S. tariffs in these sectors as a priority for negotiation.
• Businesses with Chinese inputs or complex supply chains should monitor developments closely, as these issues are expected to feature prominently in future negotiations.
• Companies should continue to assess opportunities for market diversification, particularly as Canada advances trade relationships in the Asia-Pacific region.

What to Expect

Throughout the 2026 lead-up to the annual review, the U.S. has preferred to pursue separate, bilateral negotiations with Canada and Mexico, rather than engage in tripartite discussions.

The Canadian government has indicated that it will continue to advocate for the preservation and strengthening of CUSMA while pursuing broader trade diversification initiatives, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the new Canada-Philippines Strategic Partnership, expected to deepen bilateral cooperation in trade, energy, defence and tourism.

Blakes will continue to monitor developments and provide further updates as CUSMA discussions continue.

For further information, please contact the authors or any other member of our International Trade group.