President Trump has floated the possibility of pulling the United States out of the United States–Mexico–Canada Agreement (USMCA), according to people familiar with discussions inside the White House. Advisors say the idea is being explored as a bargaining chip rather than a firm decision, but even talk of withdrawal is already prompting concern among businesses and trade officials.
Why this matters
North American production is tightly woven: the three countries’ factories and logistics networks support roughly $2 trillion in goods and services. Disrupting the pact — or even suggesting it might be disrupted — can ripple through markets, derail corporate planning and force companies to rethink where they buy parts and assemble products. The auto industry and other manufacturing sectors, where cross-border supply chains are especially complex, are the most exposed.
What’s driving the talk
Those who back the withdrawal option argue it preserves flexibility and provides leverage to correct perceived trade imbalances. Opponents warn that abandoning the agreement would erode the legal certainty companies depend on and could scare off investment. Other voices note that, despite its flaws, the USMCA still offers predictability and rules that smooth day-to-day trade.
Political calculation also matters. Lawmakers across the aisle can use the debate to score points at home, while the administration appears to see the threat of exit as a way to extract concessions from Canada and Mexico. Some senior trade officials reportedly favor negotiating targeted side deals with each partner rather than reworking the entire trilateral pact.
The clock is ticking
The agreement requires a formal review before July 1. A renewal would push the pact’s life out by 16 years; if the U.S. declines to renew, USMCA would revert to annual reviews until it naturally expires in 2036. That looming deadline turns what might have been a rhetorical maneuver into a time-sensitive policy choice with tangible consequences for companies planning years ahead.
How negotiations could unfold
People close to the talks say the administration is using the withdrawal option deliberately as leverage, not as vacillation. Core bargaining topics include enforcement mechanisms, labor rules and provisions that affect cross-border manufacturing. Officials suggest many of the desired changes could be framed as targeted updates rather than a complete rewrite of the agreement.
Still, signaling alone can unsettle markets. Firms are already running scenarios that range from modest amendments to full bilateral side agreements or outright U.S. withdrawal. As talks spread and intensify, uncertainty tends to linger — compressing investment timelines and complicating supplier contracts.
Practical consequences for supply chains
Under the treaty, any member can notify its intent to withdraw and trigger a six-month countdown. Even filing that notice would alter commercial expectations overnight. Companies would likely accelerate plans to diversify suppliers, bulk up inventories and revisit nearshoring strategies — moves that raise short-term costs and can create temporary shortages.
Industries with tightly choreographed logistics, like auto manufacturing, feel these shocks most acutely. Small delays translate into longer lead times, more customs paperwork and rerouted shipments — all of which push up costs, strain working capital and slow deliveries. If the U.S. withdrew, some Mexican and Canadian exports could face higher U.S. duties and lose tariff relief, potentially inviting retaliatory steps and further disruption. But with a firm review deadline ahead and vast, interconnected supply chains on the line, even the hint of an exit is prompting businesses and policymakers to reassess plans, timelines and risks.