USMCA Heading Into Extra Time

The report anticipates that the USMCA will not receive a full extension on July 1, 2026, shifting instead to an annual review process. This environment of prolonged uncertainty is expected to weigh on regional investment.

Key Takeaways

• 1.No clean USMCA extension is expected at the July 1 review, with a shift toward annual reviews.
• 2.The agreement will likely remain in force but face expiration in 2036 unless extended.
• 3.Ongoing uncertainty regarding the trade agreement is expected to dampen investment in Mexico and Canada.

Table of Contents

• USMCA – Heading into extra time
• Key takeaways
• USMCA heads past the July 1 whistle
• Exhibit 1: USMCA is now most likely to be subject to annual reviews
• No extension does not mean termination
• Exhibit 2: On July 1, the USMCA's first joint review will determine whether the agreement is extended or shifts to an annual review process
• Washington continues with tough asks
• Not a breakdown story, but uncertainty remains
• Exhibit 3: Investment keeps falling in Mexico
• Exhibit 4: Mexico continues to gain share in US imports
• Volatility, but central banks are unlikely to hike
• News and views
• Brazil: May formal job creation surprises on the downside
• Brazil: public sector deficit slightly wider than expected in May
• Special Disclosures
• Important Disclosures
• Other Important Disclosures

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