Most Canadian and Mexican goods continue to enter the U.S. tariff-free. Thanks to the United States-Mexico-Canada Agreement (USMCA).

But that could change if Trump decides to pull out.

In today’s sub-chapter:

The President only wants a “good deal”.

U.S. Trade Representative Jamieson Greer said Trump could decide next year to abandon USMCA or CUSMA, highlighting that the president only wants deals that are “good”. And yes, Trump mentioned last Wednesday that he’s open to letting the agreement, set for review in July 2026, expire or breaking it up into separate agreements with Canada and Mexico.

USMCA, which replaced the North American Free Trade Agreement (NAFTA), came into effect in 2020 and was signed by… guess who? Yes, Trump. And now he’s moving to undo the deal he made in his first term, which he even called the most important deal at that time.

Now, is he saying that he wants to get out of the “good deal” that he made? Or maybe he couldn’t remember he made those deals?🤭

CUSMA matters for Canada because businesses across the country rely on the stable and predictable trading environment it created. Trump was able to find a workaround to impose tariffs on Canadian goods by using what he calls his “IEEPA authority”, but many Canadian goods remain duty-free.

As of July 2025, about 12% of Canadian exports to the U.S. faced tariffs (mostly on autos and parts and steel and aluminium), which means about 85–88% entered tariff-free in Q2 under CUSMA exemptions.

And since its ratification, USMCA has strengthened trade, investment, and jobs across North America. By July 2024, goods and services trade within North America hit $1.93 trillion, which shows how strong the three economies are when they operate together under free trade.

USMCA also benefits American businesses and consumers. Trade with Canada and Mexico supports around 12 million U.S. jobs, with goods and services trade reaching roughly US$935.1 billion with Mexico and US$909.1 billion with Canada in 2024.

Experts say Trump might be using this as leverage to push Canada and Mexico to renegotiate parts of the agreement on terms more favorable to the U.S. That, to me, sounds like he’s bluffing, so he wants to see what Canada and Mexico are willing to offer.

It could also mean that Trump wants to completely abandon the agreement and negotiate separate deals with each country. Which may be true, given that Trump and his admin have criticized aspects of CUSMA, including Canada’s supply management system for dairy and auto import quotas.

If the U.S. abandons USMCA, economists say Canada and Mexico would immediately face higher tariffs. Preferential zero/near‑zero tariffs for qualifying goods would end, and bilateral trade would generally be charged each country’s WTO applied (MFN) rates, which, for many farm goods, are far lower than 25%. Now, how do you explain this to farmers who rely on tariff-free access for their crops?

North American manufacturing, especially the auto industry, would also suffer. Factories rely on smooth, predictable cross-border supply chains to keep costs low and operations efficient. Losing zero-tariff access would make goods more expensive and less competitive globally.

Last week, the USTR opened a public comment period so stakeholders can have their say on USMCA automotive rules ahead of the July review.

First, let’s be clear.

The upcoming USMCA or CUSMA review does not pose an imminent threat to Canada’s or Mexico’s economy. If all three countries agree, USMCA will be renewed for another 16 years, extending it to July 2042. If one country does not agree, it doesn’t mean the agreement ends. Instead, joint reviews will be held every year until a longer extension can be agreed to.

The real threat is the termination clause, which allows any member country to pull out with six months’ notice. But it won’t be that easy. 

From what I’ve heard from legal experts, it’s up for debate if the president can withdraw from the agreement without approval from Congress. Trump can invoke Article 34.6 to give six months’ written notice to Canada and Mexico. But since USMCA also exists as domestic law, Trump cannot simply undo it with a Friday EO.

But just in case, is Canada prepared for the possible impact? Is six months enough for Ottawa to adjust and reorganize its trade flows? With about 76% of Canadian Trade going to the U.S. in 2024, many exporters rely heavily on the American market. I would say it would take time and effort for these companies to strategically shift their business elsewhere.

And now that the CUSMA review is underway, it’s interesting to see how Canada will respond. Will it offer more compromises to make CUSMA renewal palatable to Trump? For example, Trump badly wants more access for U.S. dairy in Canada, so Prime Minister Carney might consider making some adjustments to its tariff‑rate quota (TRQs) allocations measures.

In 2021, the U.S. filed a dispute under USMCA, arguing that Canada is favoring domestic producers with its TRQ allocations. Canada made some adjustments in 2023, but Trump’s admin says the changes are still unfair. Currently, Canada maintains over-quota tariff rates exceeding 200% on most dairy products, with rates about 300% on some items like butter and cream powder.

Is Carney willing to offer concessions? Canada isn’t required to, but will it make additional changes to its TRQ allocations to keep CUSMA alive?

Anyway, it’s only words so far…no action. So let’s see what happens next.

The U.S. Trade Representative held public hearings on USMCA last week, while Canada launched its formal review in September.

This week is going to be decisive for Mexico. 

Congress will vote on President Claudia Sheinbaum’s plan to impose tariffs of up to 50% on many goods from China and other countries without free-trade agreements. The bill was approved by the lower house’s economy committee and is now going to a full vote in the lower house, then to the Senate, which is expected to approve it by Dec. 11. The new tariffs are set to take effect on January 1.

If approved, the Finance Ministry estimates the tariffs could generate an additional 51.9 billion pesos ($2.8 billion) in import revenue in 2026, an 8.3% increase from 2024.

At first glance, Mexico’s goal appears to be focused on protecting local jobs and reducing reliance on cheaper Chinese imports. But it could also be a part of a broader calculated play by Mexico ahead of the USMCA or (T-MEC) review in July 2026.

If approved, Mexico can use it as an incentive to encourage concessions from the U.S. and probably convince Trump to ease tariffs on Mexican steel and aluminum. Trump raised tariffs on these goods from 25% to 50% on June, which has been hurting sectors that heavily rely on steel and aluminum imports. 

Well, good luck convincing Trump of tariff relief.

Anyway, there’s one big problem. Many Mexican companies heavily rely on Chinese parts. In fact, Mexico doesn’t produce most of the electronic parts used in car assembly. And if they’re going to find an alternative, I’m sure it would take time and significant money.

It could also create tension with China, which many view as essential for Mexico’s trade diversification.

So it’s going to be a delicate balancing game for Mexico.

💻 Nvidia Approved to Sell H200 AI Chips to China. Nvidia can now sell its advanced H200 AI chips to China, with the U.S. taking 25% of sales. But the question is, will Beijing allow local companies to buy them? China is pushing for self-sufficiency, and firms like Huawei, Alibaba, and Baidu are developing competitive chips. Still, the H200’s advanced performance and current chip shortages could make it tempting, at least in the short term, though China’s long-term strategy is to rely on its own technology.

🇨🇦 Trump Eyes Big Tariffs on Canadian Fertilizer and Indian Rice. Donald Trump said he might impose “very severe” tariffs on fertilizer from Canada and rice from India, saying these imports hurt U.S. farmers’ competitiveness. If carried out, fertilizer costs could rise and rice supplies shrink, affecting prices. Canada and India have tried to negotiate trade deals with the U.S., but no agreement has been reached so far.

🇨🇭Trump Threatens 5% Tariff on Mexico Over Water Shortfall. President Trump warned of a 5% tariff on Mexico unless it delivers water owed under the 1944 United States–Mexico Water Treaty. He demands 200,000 acre‑feet by December 31, citing harm to Texas farmers. Mexico and U.S. officials must now address the treaty shortfall.

Who else agrees with Trump when he once called CUSMA the best trade deal ever?

In its trade talk blog, GHY International, a Canada-based trade and brokerage services provider, explains the 8 ways CUSMA can help Canadian small businesses improve cross-border operations and grow in new markets.

1. Zero-Tariff Trade. Small businesses can export most Canadian goods to the U.S. and Mexico tariff-free.

2. Updated Customs Procedures. Digital procedures and online certifications make importing and exporting faster and reduce delays at the border.

3. Raised De Minimis. Higher duty-free thresholds let businesses import goods without extra taxes or fees, which reduces costs and gives consumers more choices.

4. Lower Delivery Costs. Standardized processes and fewer tariffs reduce shipping expenses, making it easier to reach new markets.

5. Improved E-commerce Rules. The first-ever E-commerce chapter simplifies digital trade, paperless customs, and cross-border data flow for smoother online transactions.

6. Intellectual Property Protection. Stronger IP rules help small businesses protect patents, trademarks, and copyrights, including digital assets.

7. Labour and Environmental Protections. Enforced labour rights and environmental standards promote fair competition and sustainable practices.

8. Access to Government Procurement. Canadian small businesses can bid more easily on U.S. and Mexican government contracts.

Good news for tariff-hit farmers!

Trump seems to be finally delivering his long-promised $12 billion farm aid package to support farmers affected by tariffs and trade disruptions. He announced the plan during a White House roundtable with Agriculture Secretary Brooke Rollins, lawmakers from farm states, and several farmers.

Of the $12B fund, $11B will move through the Agriculture Department’s Farmer Bridge Assistance program, which will provide one-time payments to growers covered under the program. The remaining $1 billion will support other crops not covered.

Rollins said that eligible farmers would know how much they’ll get by the end of the month, and that the money will begin moving by February next year.

If we’re completely being honest, $12B is a huge, huge amount of money. But will it address the structural issues of the agricultural economy? Which is: global supply keeps outpacing demand.

The OECD-FAO Agricultural Outlook 2025–2034 projects global agricultural production to grow by 14% over the next decade. Will Trump or the next President be able to find new markets that can absorb this level of output?

Let’s not forget that most of this fall, China stopped buying soybeans from the U.S., which is crucial because China was the largest buyer of U.S. soybeans in 2024, accounting for $12.64 billion in sales.

After a high-stakes meeting with Xi in October, China agreed to purchase at least 12 million metric tons (MMT) of U.S. soybeans during the last two months of 2025. 

But guess what? So far, China has purchased only about 2.2 million metric tons since the end of October, according to USDA data. So I wonder if Beijing’s commitment will be met.

Yes, Trump’s $12B would bring temporary relief, but it won’t be able to provide a sustainable recovery for the American farm economy. Instead of relying on some kind of band-aid, the U.S. agriculture needs a thoughtful policy that can create a real, lasting impact. 

And for now, sad to say, there’s no solution or plan yet that can accomplish this.

Looks like Trump’s tariffs couldn’t stop Beijing’s export growth after all. As of Nov. 2025, China’s annual goods trade surplus topped $1 trillion, a record no other country, including the U.S., has reached.

Despite declining exports to the U.S., shipments surged to Europe, Southeast Asia, Africa, and Latin America. Domestic demand within China appears weak, yet Chinese factories kept exporting vehicles, electronics, machinery, solar panels, and other goods worldwide. 

Meaning, Trump’s tariffs did little to curb China’s global supply, which, to me, is almost as if saying, “China no longer depends solely on the U.S.” In fact, China’s exports grew rapidly in the first 11 months of 2025.

But is this really a sign of manufacturing dominance? Or does it actually reveal an underlying weakness with its sluggish import? Which has been a major pain point for Western trade partners. 

In 2024, the EU had a trade deficit of €306 billion with China, exporting €213 billion worth of goods while importing €519 billion. French President Emmanuel Macron recently warned that if China does not address its rising surplus, Europe might impose tariffs on Chinese goods.

Will China do something to address this weakness? Will it finalize a deal with the EU that increases Europe’s imports and market access, like Beijing committing to buying more EU goods such as luxury cars, pork, dairy, and pharmaceuticals? 

And if it does, Europe just wants one thing: it shouldn’t be predatory. 

Stan Chen, a supply chain expert and tech innovator, shares simple yet powerful strategies to navigate tariffs. Follow him on LinkedIn for more insights on supply chain and global trade.