The USMCA and Its Implications for the CAD and MXN

The 2026 USMCA review initiates a period of protracted trade negotiations that create medium-term uncertainty for Canada and Mexico. UBS remains cautious on the CAD while retaining a constructive view on the MXN due to its resilience and carry appeal.

Key Takeaways

• 1.The 2026 USMCA review is expected to evolve into broader trade negotiations, creating uncertainty for Canadian and Mexican growth and investment.
• 2.UBS maintains a cautious outlook on the CAD due to cyclical headwinds and USMCA uncertainty, while preferring the MXN for its attractive risk-adjusted carry.

Table of Contents

• The USMCA and its implications for the CAD and MXN
• Why does the USMCA review matter and what could 1 July mean?
• Different scenarios can play out
• What does it mean for USDCAD?
• USDCAD is driven by rate differentials and US trade policy
• What does it mean for USDMXN?
• The agreement is most likely to enter annual reviews
• Global asset class preferences definitions
• Appendix

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