Key insights
- President Trump's statement about not renewing the USMCA trade agreement could lead to increased tariffs on goods from Mexico and Canada. This carries a bearish implication for US equities as it may exacerbate inflation by raising consumer prices and disrupt trade flows with key partners. The USMCA's expiration could reintroduce tariffs on a significant portion of imports, impacting supply chains and corporate costs.
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President Donald Trump intensified his shakeup of the trade landscape this week when he said he wasn’t interested in renewing one of the country’s most important international agreements.
Speaking with reporters at the White House on Wednesday, Trump said the U.S. wouldn't renew the United States-Mexico-Canada Agreement (USMCA), the trilateral pact that sets the rules for trade in autos, agricultural products, intellectual property, and other commerce between the U.S. and its two largest trading partners.
"I'm not looking to renew it," Trump said. "Because, to be honest with you, the United States does much better. We don't need anything that Canada has, we don't need anything that Mexico has, but they need everything that we have, and they have to treat us better."1
Withdrawing from the USMCA could result in more imports being subject to tariffs, which have raised prices for U.S. consumers and fueled a resurgence of inflation.
Trump’s comments come as talks between representatives of the U.S. and Mexico continue. A round of negotiations concluded in Mexico City on May 29, and another is scheduled for mid-June with a third in July.2
Trump’s comments notwithstanding, the three economies are deeply intertwined. The U.S. did $935 billion in trade with Mexico and $909 billion with Canada in 2024, according to the U.S. Trade Representative.34
The agreement, which went into effect in 2020, is especially consequential for U.S. consumers because products compliant with the treaty are exempt from many of the tariffs Trump imposed in 2025. An estimated 80% of imports from the two countries were USMCA-compliant in 2025, according to the Brookings Institution think tank, based on government trade and tariff data.5