How Annual USMCA Reviews Could Reshape North American Supply Chains

On July 1, President Trump’s administration officially announced that it will not renew the United States–Mexico–Canada Agreement (USMCA) for a new 16-year term. Instead, it plans to introduce annual reviews to assess potential changes to the agreement.

Jamieson Greer, the U.S. Trade Representative, stated that the administration believes the agreement requires modifications to address trade imbalances and is therefore unwilling to extend it without revisions.

Although the USMCA will remain in force until 2036, provided that none of the three member countries withdraws from it, the new approach opens the door to ongoing negotiations on issues such as rules of origin, tariffs, investment, and automotive trade. Among the most sensitive topics are stricter regional content requirements for vehicles, the treatment of Chinese investments in North America, and U.S. tariffs on industries such as automotive manufacturing and metals.

The agreement has significantly boosted regional trade, which exceeded $1.6 trillion in 2024. However, business organizations and representatives from industries such as automotive, retail, and manufacturing have warned that continuous reviews could discourage investment and create uncertainty for companies that rely on integrated regional supply chains.

USMCA and the Supply Chain

The change marks a departure from the stability the agreement had provided since it entered into force in 2020, helping to consolidate highly integrated supply chains across the automotive, manufacturing, agricultural, and energy sectors. Trump’s new strategy could extend trade negotiations for years.

For supply chains, the primary impact will be uncertainty. Companies typically plan investments, develop supplier networks, and design logistics operations with time horizons spanning several decades. As a result, an annual review process makes long-term decision-making more difficult. Faced with the possibility of changes to trade rules, some companies may postpone investments in new manufacturing plants, distribution centers, or expansion projects until they have greater clarity about the future of the agreement.

In the freight transportation sector, this uncertainty could also lead to changes in cargo movement patterns. If negotiations result in announcements of new rules of origin or tariff changes, many companies may accelerate imports or exports to take advantage of current conditions, temporarily increasing demand for trucking, rail, and maritime transportation. Logistics flows could then adjust as companies reorganize their supply chains to comply with the new requirements.

Likewise, if the United States pushes for stricter rules of origin, particularly for the automotive industry, manufacturers would need to increase the regional content of their products and identify new suppliers within North America. This would reshape sourcing routes and alter freight volumes moving between Mexico, the United States, and Canada, while also increasing the need for verification and documentation processes to demonstrate compliance with the agreement’s provisions.

An Element of Uncertainty

Although the USMCA remains in effect and continues to provide the trade benefits that have supported the region’s economic integration, the decision to replace a long-term renewal with annual reviews introduces an element of uncertainty that could affect both supply chain planning and freight transportation dynamics in the years ahead.

Lobbying groups, including the U.S. Chamber of Commerce and the Business Roundtable, have urged the governments to strengthen and preserve the agreement, according to Bloomberg.

“Supply chains are built with a 30-year vision, not a five-year one, and uncertainty could discourage investment and growth,” wrote Madeline Chalecki, Deputy Director of the Atlantic Council’s GeoEconomics Center, in an online post this week.