President Donald Trump is reportedly questioning whether the United States should remain in the US-Mexico-Canada Agreement (USMCA), the very trade pact he signed during his first term. While no formal decision has been announced, internal discussions about a possible withdrawal are unfolding just months before the agreement’s mandatory review on July 1. For investors and policymakers alike, the mere possibility of a U.S. exit is enough to reignite uncertainty across North America’s tightly integrated economies.

The USMCA governs nearly $2 trillion in goods and services trade annually, making it one of the largest trading blocs in the world. Any disruption could ripple through manufacturing, agriculture, automotive supply chains, and cross-border energy markets — all critical sectors for both U.S. and global growth.

Renegotiation Turns Contentious

Originally expected to be procedural, the upcoming review has evolved into a high-stakes negotiation. U.S. Trade Representative Jamieson Greer has signaled that the administration does not intend to rubber-stamp the 2019 terms, instead pushing for stronger rules of origin, expanded worker protections, and enhanced cooperation on critical minerals.

Trump has reportedly asked aides why he should not withdraw entirely, though he has stopped short of issuing a formal threat. The administration appears to be keeping its options open, potentially using the possibility of exit as leverage to extract further concessions from Canada and Mexico.

Mexican President Claudia Sheinbaum has downplayed the risk of a U.S. departure, while Canadian Prime Minister Mark Carney described recent talks as “positive.” However, officials in Ottawa acknowledge that negotiations have grown more challenging, particularly amid broader geopolitical tensions and trade disputes.

Economic Stakes and Market Risks

If the agreement is not renewed, the pact could enter annual reviews until its expiration in 2036. Alternatively, any member country can announce its intent to withdraw with six months’ notice. Such a move would likely expose Canadian and Mexican exports to higher U.S. tariffs, with potential retaliatory measures following swiftly.

Markets are particularly sensitive to tariff escalation risks. Automotive manufacturers, whose supply chains span all three countries, could face immediate cost pressures. U.S. exporters may also suffer if retaliatory duties curb access to Canada and Mexico — currently America’s two largest trading partners.

Heading into midterm elections, rising tariffs could also exacerbate inflation and affordability concerns, a politically delicate issue. Business groups and lawmakers from both parties are expected to resist any abrupt withdrawal that threatens domestic industries.

Strategic Leverage or Structural Shift?

Trump has previously threatened to exit trade frameworks before negotiating revised terms, as seen during the transition from NAFTA to USMCA. His recent comments labeling the agreement “irrelevant” contrast sharply with earlier praise describing it as “great for all countries.”

For global investors, the key question is whether this is tactical brinkmanship or a genuine shift in U.S. trade doctrine. Supply chain integration across North America has deepened over three decades. Reversing that integration could trigger capital reallocation, currency volatility, and long-term structural adjustments.

What to Watch Going Forward

Markets will focus on whether Trump escalates rhetoric publicly or initiates formal withdrawal procedures. Equally important will be responses from Canada and Mexico, as well as signals from U.S. industry groups.

With trade, inflation, and geopolitical tensions intersecting, the USMCA review has become more than a routine update — it is a test of North America’s economic cohesion in a shifting global order.