CUSMA July 1 Review ... What Changes and What Doesn't

Your CUSMA Weather Forecast (The Ground Under It Has Already Shifted)

Logo by Mike

By L.Kenway BComm CPB Retired
This is the year you get all your ducks in a row! Start by starting ... and keep it simple. Consistency beats perfection.

Published July 4, 2026

WHAT'S IN THIS ARTICLE
What Happened | You Can Exhale For Now | Why July 1st Headlines Were Inaccurate | Why This Feels Different Than 2018 Negotiations | What This Changes For Your Business | Where Does It Stop? What I'm Watching | FAQ | Where To Go From Here

Beginning of Series >> What’s Happening: Canada’s Trade Shifts
Related >> How Tariffs Impact Your Business | Why Canada Is Changing Its Trade Strategy | CUSMA Review Primer | Tariff Timeline | 4 Strategies to Protect Your Shipping Margins

If you caught a headline on July 1 that made it sound like CUSMA is finished, take a breath. It isn't. Something did change ... but it's slower and more manageable than the headline made it sound. Let me walk you through it.

The 30-Second Forecast

  • What changed: CUSMA moved onto a year-by-year review track instead of a clean 16-year renewal. The U.S. declined to renew; Canada and Mexico didn't.
  • What didn't: The rules you traded under on June 30 are the rules you're trading under today. Compliant goods still cross largely tariff-free ... for now.
  • Who should watch closely: Anyone shipping goods across the border ... and most of all if you're not certain they're CUSMA-compliant.

What Happened

Six years ago, when CUSMA (Canada-US-Mexico Agreement) replaced NAFTA (North American Free Trade Agreement), the three countries built in a check-in. Every six years they sit down for a technical review and decide whether to keep it running for another sixteen years. July 1, 2026 was the first of those check-ins.  It was a START date, not a deadline. Nothing had to be settled that day, and nothing was.

Here's the piece the headlines skipped over. Two of the three countries (Canada and Mexico) had already said, in writing, that they want the agreement renewed. Canada sent formal notice back in June; Mexico did the same. The one country that declined to renew was the United States.

Because all three didn't confirm renewal, the deal now moves into a yearly review instead of a clean sixteen-year renewal. Those annual reviews can run for up to ten years. If nothing gets resolved in that window, the agreement would end in 2036. Canada's own chief negotiator Janice Charette called July 1 a checkpoint, not a cliff. Jamieson Greer said something similar on a morning news show on July 2, 2026. It's a long road with a lot of exits, not a ledge on a cliff.

So read this next sentence twice if you need to. The rules you traded under on June 30 are the same rules you're trading under today. Your invoices, your customs paperwork, your shipping ... none of it changed because of July 1.


You Can Exhale For Now

“Canada’s most prudent course is to keep negotiating in good faith where our efforts are reciprocated, while refusing to be rushed into a bad deal ..."

Expert Group on Canada–U.S. Relations, Beyond Renewal Report
July 3, 2026 (via the Globe and Mail article)

Here's what has been signalled for months, and what I think most of the coverage buried initially. The United States (the country that declined to renew) isn't talking about 'knocking the building down'.

Their trade representative Jamieson Greer has described the parts of the agreement that work as 'load-bearing pillars' he doesn't want to touch. The plan he's floated is to keep that structure standing and add separate side deals ... one with Canada, one with Mexico ... to sort out the country-by-country disagreements. Canada's own negotiator paints the same picture from the other side ... the core framework stays, and the bilateral pieces snap on top like Lego. That's a renovation, not a demolition.

The U.S. starting position is wanting things to change, and the side deals are where the hard bargaining over autos, dairy, and the rest will happen. Not everyone reads the setup as comforting; some Canadian trade-law watchers think the annual-review path is being kept open on purpose, to hold leverage over the years. So do exhale out, for now. The structure is holding. Relax completely? Not quite yet.


Why July 1st Headlines Were Inaccurate

"Much of the damage has already been done by U.S. tariffs and by pressure on U.S. companies to invest at home rather than in Canada."

Expert Group on Canada–U.S. Relations, Beyond Renewal Report
July 3, 2026 (via the Globe and Mail article)

The part that actually matters for your business.

For a while, the big question was 'will CUSMA survive?'. It turns out the tariff-free world CUSMA was built to protect has already been chipped away last year through a different door when the U.S. administration brought in Section 232 tariffs. Canada's position is these sectoral tariffs contravene CUSMA because they directly violate CUSMA market access obligations.

Section 232 tariffs are an American rule that lets the U.S. put tariffs on certain goods for national security reasons. This tariff authority sits outside CUSMA's promises. Steel. Aluminum. Autos. Lumber. Copper. Derivatives ... the list grows. Those tariffs are already in place. Canada, for its part, pulled back most of its counter-tariffs on U.S. goods that qualify under CUSMA for a variety of reasons. But it did keep its own duties on steel, aluminum, and autos again for a variety of reasons. I'm not trying to be vague when I say a variety of reasons. It's just that in this geopolitical landscape we find ourselves in 2026, the federal government has some very fine lines to walk. In effect, the Prime Minister and his government have to talk and chew gum at the same time just like you do as a business owner. There is rarely a path straight through to solve a problem.

So the CUSMA will no longer be a simple renewal but a renegotiation of some parts, not all, of the existing agreement. It's no longer about protecting a tariff-free North America. That ship has partly sailed. It's become more about how much of the Section 232 tariffs that already exist can be walked back, at what rate, and on which goods. That's Canada's whole posture at the table. Janice Charette has stated the goal is negotiate the lowest tariffs possible, on the narrowest list of goods possible, holding onto as much tariff free market access as it can.

The clearest example is cars, and there is a reassuring wrinkle in it for Canada. The U.S. is pushing to require that vehicles contain 50% American-made content to qualify for the good rates. At first glance that kind of sounds alarming. But Canadian-built vehicles already run about 50% U.S. content on average. It climbed from roughly 38% under NAFTA to about 50% under CUSMA. The content target is a much harder lift for Mexico (at an estimated 38%) than for Canada; we're mostly already there. The catch for Canada isn't the number ... it's the paperwork. Today's rules count North American content as a whole and don't force you to separate the U.S. share from the Canadian share. A new U.S.-specific rule would mean new tracking and new proof, even for businesses that already meet it. So the burden that's coming, if it comes, is more administrative than existential.


Why This Feels Different Than The Last Round Negotiations

"What was intended as a technical review is now a political test of whether Canada can preserve reliable, rules-based access to its principal market while the U.S. administration increasingly questions the agreement itself."

Expert Group on Canada–U.S. Relations, Beyond Renewal Report
July 3, 2026 (via the Globe and Mail article)

If you lived through the 2018 CUSMA talks and this round feels worse, you're not imagining it. It's worth taking a minute to understand why, because it may change how you should respond this time around.

In 2018, both sides fundamentally wanted a deal. It was a modernization of NAFTA, and the destination ... a signed agreement that kept an integrated, mostly tariff-free market ... was never really in doubt. The differences were about terms, not about whether there'd be an agreement at the end of it.

This time there's no agreed-upon destination. The U.S. has signalled it doesn't want a straight renewal and that Canada will have to live with at least some tariffs. The process itself now ... annual reviews, tariffs layered on through shifting U.S. legal doors ... has become the condition, not a road to a settled deal. That's the real shift. The last time, you could reasonably wait for the dust to settle. This time, the dust may just be the 'weather' now. Which brings me to the part where I stop saying 'wait' because economic uncertainty seems to be the norm for now. From what I've been reading, many Canadian analysts in this field feel there is no end in sight for the coming years. The Expert Group refers to it as "a climate of permanent uncertainty" in their Beyond Renewal report. This is why Canada is changing its trade strategy.


What This Changes For Your Business

Let me split this into two piles, because they don't call for the same response.

The pile that's still up in the air
The review itself. Whether the tariffs on steel and aluminum, et al get walked back. Where the auto-content rule finally lands. None of that is settled, and it won't be for a while. This looks like it will move in months and years, not days.

For anything in this pile, the steady move is the right one. Stay aware, but don't make expensive changes on a headline or a maybe. Decisions made in a panic on an unsettled negotiation are usually the ones you come to regret. Watch, note, breathe. Stressful I know.

The pile that's already real
This is the part that changed underfoot in early 2025 hoping things could get resolved for  everyone at the scheduled CUSMA review date. The duty-free break on small cross-border shipments is gone. (Technically it's suspended and still being fought in court.) For all practical purposes, it's gone in practice for now. Sectoral tariffs are already in effect.

There's a steady effort to keep the pressure on through whichever U.S. legal door is open next like the Section 301 tariffs being floated for later this July. (These will replace the temporary Section 122 surcharge which itself replaced the IEEPA tariffs the courts struck down.) For anything in this pile, 'wait and see' isn't caution. It's just waiting to get squeezed.

Here's the one question that tells you which pile you're in: Are your goods CUSMA-compliant, or not? That's the hinge nearly everything swings on. CUSMA-compliant goods still cross the border largely tariff-free; about nine in ten Canadian exports. Non-compliant goods are where the tariffs, old or new, actually bite. If you're not sure which side of that line you sit on, finding out is the first thing worth doing, before anything else.

Practically you know (or should know if you hang around this site long enough) I'm not going to hand you a checklist, because your business isn't mine. But I will offer a direction to consider pursuing.

  1. If you ship physical goods across the border, the end of that duty-free shipping exemption has already touched your business. It likely showed up in your numbers almost immediately. That event was not a someday problem. I walked through what changed at the time and laid out four ways to respond ... including a 30-day plan if you want somewhere to start ... over on U.S. De Minimis Exemption Ended. Start there.
  2. If tariffs are creeping into what you buy, or squeezing what you can charge, I cover that in the How Tariffs Impact Canadian Small Business primer. There's a simple early-warning system in there for catching cost creep before it hurts, and a practical action plan to work through. That's the page to sit with.
  3. And if you find yourself asking the bigger WHY ... why is this happening, and is it going to keep happening ... check out Why Canada Is Changing Its Trade Strategy. You may have noticed the Prime Minister has been travelling all over the world. He has been busy signing new trade and security agreements, memorandums of understanding in other markets. He's not chasing growth; he's working to spread the risk so one market going sideways doesn't take us down with it. (I intermittently update that page as the list of signed agreements grows.) As an aside, you should be doing this in your business as well ... spreading risk. 


Where Does It Stop? What I'm Watching

The answer to 'Where does it stop?' is that nobody knows right now. But there's a pattern worth seeing, because it'll save you from chasing every headline.

You may have noticed when one legal justification for tariffs gets knocked down, the U.S. administration stands up another in its place. It started as a fentanyl-and-border argument. When the courts struck that down, it became a temporary import surcharge. That surcharge has an expiry this July. Waiting in the wings is a new tariff built around forced-labour enforcement. Different reason each time; same direction of travel.

Here's the freeing part for you and your business. You don't have to track which reason is in the headline this month. Most of these measures, including the forced-labour one being teed up, only hit goods that aren't CUSMA-compliant (for now), and they usually don't take effect the moment they're announced. For example, for the upcoming proposed forced labor tariff, there will be a comment-and-review window first. (That's why I'm sometimes slow to update the tariff timeline.) The thing to watch isn't the justification. It's your own exposure. Compliant or not. That one line decides whether any of it reaches you.

Beyond that, the threads worth half an eye of your time are:

  1. whether the Section 232 tariffs on steel and aluminum get reduced;
  2. where the auto rule lands;
  3. the long-running softwood lumber fight; and
  4. Canada's steady push into markets beyond the U.S.

That last one matters more than it looks. When one market gets less predictable, every other market gets more valuable. That's not politics. It's just not putting all your weight on one leg.


Frequently Asked Questions

The questions below aren't really about trade policy ... they're about the ground you're standing your business on. One thread runs through all of them ... protect what's core, spread your risk, don't sign under pressure. It's how Canada is trying to stay sovereign ... and it's the same logic that keeps a one-person shop standing.

Why does the Prime Minister (PM) seem to change his message depending on who he's talking to?

Because he mostly does ... and once you notice which room he's standing in, the "contradiction" turns into one strategy seen from three sides.

At Davos the PM warned against "fortresses" and being coerced by bigger powers. Then in New York he pitched a "Fortress North America" and even borrowed Trump's slogan. Which is it?

This is a fair question because yes he really did say both. He does tailor the message to the room. But once you notice which room he's standing in, the contradiction resolves into one strategy seen from three sides.

Room one - the world
In January 2026, at the World Economic Forum in Davos, in an invitation-only hall of other middle-sized countries and international delegates, the message was a warning. The old rules-based order has ruptured, bigger powers are using trade and tariffs as coercion, and countries like Canada can't let integration turn into dependence. The PM said that deep integration can turn into a trap, and that middle powers shouldn't just build higher walls. His message? Don't get so tied to any one partner that you can be squeezed. That's a rallying speech ... middle powers are stronger banding together to secure their own supply chains than being picked off one at a time.

Room two - American business. In May, at the Economic Club of New York, in front of international investors and multinational executives that Canada actually needs, the tone flipped warm. He pitched a "fortress North America," called it "in everyone's interest," and borrowed "make America great again" to argue that Canada and the U.S. should team up on autos, metals, and energy to compete against the rest of the world, especially China. That's a sales pitch to investors who have capital to fund (re)building Canada's infrastructure. We are your most reliable partner, and Canada is a stable, premiere destination for the international capital it needs to build its energy, transport, and technology infrastructure. Invest here, and the uncertainty hanging over your investment goes away.

Room three - Canadians. At home, in front of voters worried about affordability, jobs and sovereignty, the message is patience. Don't panic. Let's not rush into a bad deal just to make the discomfort stop. There's a ten-year runway of annual reviews before the agreement could actually end, and the countries that hurried into quick deals with Washington? The Prime Minster argued they got ones that "weren't worth the paper they were written on". The reassurance he's selling to Canadians? Canada is negotiating from a stronger spot than news headlines suggest.

Three rooms, three messages. One thread runs through all of them. Integrate where it's genuinely mutual, diversify so you're never cornered, and don't sign under pressure.

Critics are reading the dichotomy less generously. They say he's just telling each room what it wants to hear. But what looks like inconsistency to a political eye looks like ordinary competence to anyone who runs a business, or has worked under enough management styles to tell the difference. You pitch the same company one way to your banker, another way to a new hire, another way to a customer ... same company, same goal, three different rooms. If you look carefully, you can which business owners or executive teams are building something durable and which are operating from managing the optics (and their bonus). Tailoring your message to the room is what the builders do. Nobody calls that a flip-flop. They call it knowing your audience. And it looks like competence to me, whatever side of the political spectrum you sit on.

Put together? The Prime Minister's message is unified from a business perspective. Read his intentions however you like ... to me, the strategy on the page reads the same. Integrate where it's genuinely mutual, diversify so you're never cornered, and don't sign a bad deal just to make the discomfort stop. Let's say it again. Integrate and hedge ... NOT integrate or hedge. Don't put all your eggs in one basket. Maximize Canada's sovereignty and prosperity in a global fracturing economic climate.

What does this mean for your business? The practical reading is the same either way in my opinion. Ottawa is chasing closer U.S. ties and new markets at once. That's not the uncertainty ending. It's the uncertainty being managed on two tracks with no quick ending in sight. Which is exactly why running your own shop the same way ... protect the core, spread the risk ... is the sane response. Just like the Prime Minister is doing to keep Canada sovereign.

More >> Why Canada Is Changing Its Trade Strategy

Canada needs both the U.S. and China ... but the two are at odds, and both have punished us. How is Canada supposed to walk that line?

Carefully, and without ever fully picking a side ... because Canada can't afford to lose either.

Let's start with how tight the squeeze got. Canada joined the U.S. in 2024 in tariffing Chinese EVs. China hit back at our farmers (canola, pork, seafood) with punishing tariffs). Siding with the U.S. bought Canada no goodwill. In March 2025, Washington put its own Section 232 sectoral tariffs on our steel, aluminum, and autos anyway, seemingly against the very deal (CUSMA) it had signed in 2018. Two giants, and Canada took a hit from each.

Now watch how narrow the escape route is. In January, Canada eased its Chinese-EV tariff by introducing TRQs (tariff-rate quotas) to win relief for its farmers ... and it partly worked. China lifted duties on canola seed, canola meal, and seafood. (Pork and canola oil stayed put, and the relief only runs to the end of this year.) But the moment Canada leaned China's way, Washington snapped. Trump praised the deal one week, then days later called it a disaster and threatened 100% tariffs on everything Canadian. Canada had to get on the phone and reassure the U.S. it wasn't chasing a broad China trade deal ... just a narrow fix for a few battered sectors.

That back-and-forth is the tightrope. The way you stay on it comes down to a few moves in my mind.

(1) Keep any deal narrow and specific, not a wholesale alliance with either side.

(2) Cap what you open ... the Chinese EVs were held under 3% of the market with annual growth rates, enough to help farmers without flooding the auto sector or handing the U.S. a grievance. [It should be noted that the U.S. administration has backed away from EVs.]

(3) Hold your red lines with both.

(4) Above all, build other customers ... Europe, the Indo-Pacific, Latin America ... so neither superpower is the only door, and neither gets to set all the terms.

Here's why I think this matters to you.
Because it's your situation in miniature. Picture two big clients or customers who can't stand each other, and you can't afford to lose either. You don't marry one and dump the other.

You keep each relationship clear and contained, you hold your non-negotiables. Then you go find enough other work so that no single client or customer owns your survival. That is not indecision. It is independence.

A country does the it with trade deals; you do it with your customer list. Same principle, same reason. Don't let any one relationship decide your fate. 

It feels like Ontario and Quebec get help fast when trade issues hit them, while Western Canada and  Atlantic Canada wait longer. Is that real or perception only?

Partly. The truth is more tangled than the grievance.

Here's how I read it after doing some fact checking.

The Regional Tensions
The strain between regions is real and out in the open. British Columbia has said lumber isn't getting the attention it deserves; the Prairie premiers pushed publicly for faster action on the China canola tariffs; and "Team Canada" visibly splintered as the auto industry's interests bumped against the canola, seafood and pork industry's interests.

There's an underpinning structural tension too. The tariff Canada put on Chinese EVs mostly protected auto jobs in Ontario ... but it was Prairie farmers and coastal fishers who absorbed China's revenge. It's tempting to explain that by saying auto simply matters more to the economy ... but that isn't really it. Farming, fishing and forestry aren't lightweights; taken together they're in the same economic league as autos and metals. What sets the auto sector apart isn't size so much as concentration. It's a large, visible, unionized industry clustered in southern Ontario, close to the political centre, where one threatened plant becomes a national headline. The sectors that absorbed China's retaliation are spread thin across the Prairies and the coasts, far from Ottawa. The cost landed in one part of the country to shield an industry in another, and pork producers are still waiting for relief.

Federal Financial Support
But "little or no support for the West and East" doesn't quite hold up. Ottawa put more than $1.7 billion behind softwood lumber, named canola farmers directly in the 2025 budget with dedicated cash-flow programs, and stood up tariff-response funds for the Prairies and Atlantic Canada. The dollars did flow. What producers argue is that they came late and fell short of the damage. That is a different, and fairer, complaint than being ignored.

What's Real? What's Perceived?
I see it as sitting in the middle. Not a (current) government that abandons the regions, but one where population and votes shape how fast and how loudly a problem gets answered. A worry in Windsor reaches a minister's desk quicker than one in Estevan or Yarmouth. That's not a conspiracy. It's the ordinary physics of a country where two provinces hold most of the seats and are in close proximity to Ottawa.

What Matters For Your Business
Here's what I think matters for you wherever you sit. If your living depends on a crop, a catch, or a resource far from the centre of political gravity, you can't build your plans around being first in line for a rescue. Help may come ... later, and maybe smaller than you need. Unlike Ontario and Quebec, Western Canada often say they don't want financial bailouts. They want the situation rectified and to be treated on an equal playing field to Eastern Canada.

This is the whole reason this series keeps circling one idea ... your own resilience is the support you can actually count on. Don't wait to be saved. Build so you don't have to be.

More >> Protect Your Money

Where To Go From Here

A couple more doors, for whoever needs them. If you want the nuts and bolts of the review itself ... how it works, what the annual-review path actually means ... check out the CUSMA Review 2026 Primer. If you just want the running list of what's in effect and when, the Canada–U.S. Tariff Timeline keeps it all in one place.

Underneath all of it is the question and reason I wrote this page in the first place ... Is this just how it's going to be now? I'm guessing probably, yes. That question deserves more than a paragraph, so it will be getting its own home in Uncertainty Is Here to Stay ... Do You Need to Change Your Business Model? (It will be coming soon. I just have a few bookkeeping deadlines to meet before I have to write it). At some point the question stops being 'how do I get through this change?' and starts being 'how do I run a business that expects change?'. That's the one that matters for the long haul.

You don't need to become an expert in any of this. You just need enough awareness and access to business intelligence to make calm decisions and protect your margins. That's what the routines are for ... Money Mondays, Treasury Thursdays, Fundamentals Friday, the early-warning system in the tariffs primer. They're what turn 'the weather's unpredictable' into something you actually handle, week by week, instead of something you brace against.

🦆 Solo CEO Move
So here's your 🦆 Solo CEO Move. Find out which side of the compliance line your goods sit on. (Are your goods CUSMA-compliant?) Also make a note ... Are you indirectly affected by sectoral tariffs? Before anything else, these answers tell you which pile you're in and whether any of this reaches you at all.

Then get back to running your business.


*A note on sources for this article: the July 1 outcome comes from the U.S. Trade Representative's own statement that day, and the "load-bearing pillars" description are from Greer's April remarks at the Hudson Institute. The review mechanics (the six-year check-up, the sixteen-year renewal, the fall-back to annual reviews through 2036) are set out in Article 34.7 of the agreement itself. The auto-content figures come from Flavio Volpe of Canada's Automotive Parts Manufacturers' Association. Canada's and Mexico's renewal requests, and the tariff details, are drawn from CBC and Globe and Mail reporting. Where I've described the tariff picture, I'm summarizing widely reported facts in my own words, not any single outlet's.

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