Trade Watch: CUSMA / USMCA / T-MEC Update

‍North American trade rules are evolving rapidly. This briefing summarizes the key developments as of July 3, 2026. Information is provided for general guidance only and should not be considered customs or legal advice.

Executive Summary

• The USMCA/CUSMA/T-MEC agreement was not terminated.
• The agreement remains in force after the July 1, 2026 review.
• The agreement was not renewed for another 16-year term and now moves to annual reviews.
• CUSMA-qualifying goods continue to enter duty-free.
• Non-qualifying goods remain subject to the Section 122 surcharge (currently expected to expire around July 24 unless replaced).
• For most importers and exporters, properly claiming CUSMA origin is now more valuable than at any point since the agreement came into force.

1. Background: From NAFTA to CUSMA

The North American Free Trade Agreement (NAFTA) took effect January 1, 1994, eliminating most tariffs between the U.S., Canada and Mexico. After renegotiation in 2017–2018, it was replaced on July 1, 2020 by a modernized deal known as CUSMA in Canada, USMCA in the U.S., and T-MEC in Mexico.

The agreement updated automotive rules of origin, added digital-trade, labor and environment chapters, and expanded U.S. access to Canada's dairy market. Most important today, it added a 16-year term with a mandatory joint review at the six-year mark (Article 34.7)—the review now underway in 2026.

2. How Much Duty Do You Actually Pay?

Qualifying goods move duty-free in both directions—provided they meet the rules of origin and a valid certification of origin is on file.

Note: "duty" is separate from domestic taxes. Goods imported into Canada still incur 5% GST plus any provincial tax regardless of origin. Sector tariffs (Section 232, lumber AD/CVD) apply regardless of CUSMA status.

Why This Matters: For many years, companies chose not to certify CUSMA origin because duty savings were minimal. With new U.S. tariffs on non-qualifying imports, that decision can now mean the difference between paying 0% duty and paying significant additional costs. Companies that have never reviewed their origin qualification should consider doing so now.

3. What's Happening in 2026

2026 is the year of the first mandatory six-year joint review under Article 34.7. Following a public hearing in December 2025 and bilateral negotiating rounds, the three governments met (virtually) on July 1, 2026 for the formal review.

The key outcome: the United States did not agree to renew the agreement for a fresh 16-year term. The USTR said the parties would keep engaging to address the agreement's "shortcomings" and U.S. trade deficits. The agreement remains in force in the meantime, and a further U.S.–Mexico bilateral round is expected the week of July 20.

4. Major Outstanding Topics (As Publicly Declared)

5. The Options: Extend, Continue, or Terminate

• Renew / extend (did not happen July 1): agreement by all three would have reset the clock for a new 16-year term, next review 2032.
• Continue without renewal (current path): CUSMA stays in force but shifts to an annual review cycle, scheduled to terminate in 2036 unless later extended.
• Terminate / withdraw: any party may withdraw on six months' notice (Article 34.6), reverting trade to WTO terms and sector tariffs—the most disruptive outcome.

6. Where We Are Today (July 2, 2026)

CUSMA was not renewed on July 1, putting it on an annual-review track toward possible termination in 2036 unless extended. Qualifying goods currently avoid the Section 122 surcharge (that exemption is indefinite); the surcharge on non-qualifying goods is set to expire by statute around July 24, and what follows it is unresolved.

Bottom line for shippers: certifying origin under CUSMA is more valuable than it has ever been. If your goods qualify, make sure you have a valid certificate on file for every shipment.

7. What We'll Be Watching

• Section 122 expiry (late July) and whatever replaces it
• U.S.–Mexico negotiations (round expected week of July 20)
• Final softwood lumber determination (expected Aug–Oct 2026)
• Additional Section 232 actions
• The next annual CUSMA review milestone

We'll track these in Trade Watch Issue #2.

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Sources: NAFTA/CUSMA background — CBP, Congress.gov; tariff and Section 232 figures — CBP, C.H. Robinson, Holland & Knight, Tax Policy Center; softwood lumber — Global Affairs Canada, NAHB, U.S. Commerce; 2026 review and outstanding issues — USTR, CSIS, King & Spalding, Supply Chain Dive, Baker Institute, Congress.gov. Rates change frequently; confirm current figures before relying on them.