Imagine your business, your livelihood, hanging by a thread, all because of a single, potentially empty threat. That's the reality Canada and Mexico might face, as trade experts are sounding the alarm: Trump could weaponize the USMCA withdrawal as a high-stakes bargaining chip.
According to Barry Appleton, a Toronto lawyer and co-director of the Center for International Law at New York Law School, the mere suggestion of pulling out of the USMCA is a powerful tool. He views it almost as a form of economic coercion. Appleton testified before the Office of the U.S. Trade Representative (USTR) during a scheduled review of the U.S.-Mexico-Canada Agreement (USMCA) in Washington, emphasizing the potential danger.
Brian Clow, former deputy chief of staff to Prime Minister Justin Trudeau, shares this concern. He reveals that during Trump's first term, the Prime Minister's Office was already wary of this possibility. Now, he believes the risk of Trump issuing a withdrawal notice to pressure Canada and Mexico is increasing. A withdrawal notice triggers a six-month countdown to exiting the agreement.
You might be thinking, "Surely, that's too risky, even for Trump!" And that's where the debate begins.
Clow, having worked on the USMCA, is pessimistic about the mandated 2026 review. He believes the U.S., under Trump, is solely focused on extracting concessions from Canada and Mexico, with no interest in mutually beneficial outcomes. "I think the Trump administration is not looking for deals that help all three countries. They’re looking for unilateral concessions from Canada and Mexico. So, it’s going to make getting through the review challenging," he stated.
Laura Dawson, executive director of the Future Border Coalition, while also testifying at the USTR hearings, presents a counter-argument. She believes the U.S. benefits too significantly from the USMCA to simply walk away. Canada and Mexico are, after all, major U.S. trading partners, and countless American companies rely on integrated supply chains within North America. "Without the USMCA, the legal framework for U.S. trade would be completely fractured," Dawson argues. "There are a lot of places in the United States that are both Trump supporters and trade supporters. So, I think it would be very difficult to find a constituency of support to abandon the North American trade deal."
But here's where it gets controversial... Dawson acknowledges that renegotiation will be difficult, stating, "The Trump administration has proven that they are willing to rewrite the rules of global trade." This raises the question: Even if the U.S. doesn't fully withdraw, could they fundamentally alter the agreement to their advantage, leaving Canada and Mexico at a disadvantage?
Adding another layer of complexity, it's unclear how the White House would handle USMCA revisions requiring Congressional approval, as Trump hasn't secured trade promotion authority. Dawson suggests the U.S. might resort to annexes and side letters to bypass Congress for certain changes.
Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, plans to defend Canada's auto industry against Trump's efforts to limit Canadian vehicle imports. The U.S. currently imposes a 25% tariff on Canadian-made cars, with an exemption based on the value of U.S. parts used. Volpe emphasizes the growing U.S. content in Canadian-made cars to demonstrate mutual benefit, noting that American parts per vehicle assembled in Canada have significantly increased in recent years. He rightly points out that Canada is the U.S.'s top export market for vehicles and parts, and that Canadian companies employ tens of thousands of American workers. "No country buys more U.S.-built vehicles and parts than Canada," he intends to tell Washington.
Goldy Hyder, president of the Business Council of Canada, offers a more optimistic perspective. He sees the ongoing review as a positive sign that the administration intends to preserve the USMCA. He warns that abandoning the agreement would be disruptive for U.S. businesses and stresses the need for collaborative negotiations involving all three countries. "We cannot let that happen. We must be at that table, which is why you hear me regularly say it is important that the Prime Minister remain engaged with the President."
And this is the part most people miss... Hyder highlights a crucial risk: the review dragging on beyond 2026, creating prolonged uncertainty. This extended period of negotiation would undoubtedly destabilize trade relations and hinder long-term planning for businesses in all three countries.
So, what's the takeaway? The possibility of Trump using the USMCA as leverage is real, but the extent of the threat and the potential consequences are open to debate. Will the U.S. ultimately prioritize its own perceived gains over the stability of North American trade? Will Canada and Mexico be able to effectively navigate these turbulent waters? And perhaps most importantly, do you believe the USMCA is truly beneficial for all three countries, or is it inherently skewed in favor of one? Share your thoughts in the comments below!
