Trump CUSMA Withdrawal
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✍️ By Krishna Arya
Trump CUSMA Withdrawal : North America’s $2 trillion trade relationship is once again facing uncertainty.
According to reports, US President Donald Trump is privately weighing whether the United States should withdraw from the Canada-United States-Mexico Agreement (CUSMA) ahead of its mandatory July 1 review. While no official announcement has been made, even the possibility of an exit is enough to send ripples across global markets.
The renewed debate comes at a sensitive time, as trade negotiations with Canada and Mexico continue behind closed doors.
What Is CUSMA and Why It Matters?
The Canada-United States-Mexico Agreement — known in the United States as United States-Mexico-Canada Agreement — replaced the North American Free Trade Agreement in 2020 during Trump’s first term.
The deal governs nearly $2 trillion in goods and services trade annually, shaping supply chains in:
- Automobiles
- Agriculture
- Energy
- Technology
- Manufacturing
If the US were to withdraw, it could trigger:
- Higher tariffs on Canadian and Mexican exports
- Disruptions in cross-border supply chains
- Rising costs for American consumers
- Increased inflationary pressure
Why Is Trump Considering an Exit?
Sources suggest Trump has asked aides why the US shouldn’t withdraw from the agreement he originally negotiated. However, the White House has emphasized that any talk of imminent action is “speculation.”
Still, trade officials are signaling a tougher approach this time.
US Trade Representative officials have indicated that the administration is not interested in simply extending the 2019 framework without significant changes. Talks are expected to proceed separately with Canada and Mexico — with relations reportedly more strained with Ottawa.
Trump has long argued that previous North American trade structures disadvantaged American workers. Even after renegotiating NAFTA into CUSMA, he has continued to criticize trade imbalances and has hinted at preferring bilateral deals instead.
Canada and Mexico Downplay the Risk
Leaders in both countries appear calm — at least publicly.
Mexican President Claudia Sheinbaum stated that the issue of US withdrawal has not been raised in official discussions. Meanwhile, Canadian Prime Minister Mark Carney described recent talks with Trump as “positive.”
Despite diplomatic reassurance, markets understand that even uncertainty can impact investment decisions and currency stability.
What Happens If the US Withdraws?
Under the agreement, any country can withdraw with six months’ notice.
If CUSMA is renewed this July, it would remain in force for 16 more years. If not fully renewed, it would face annual reviews until its expiration in 2036.
A US exit would likely mean:
- Reversion to World Trade Organization tariff structures
- Legal disputes between member nations
- Volatility in automotive and agricultural industries
- Political backlash from US business groups and lawmakers
Economists warn that higher tariffs could increase prices for everyday goods — from cars to groceries — affecting households across North America.
Is This a Negotiation Strategy?
Observers note that Trump has previously used the threat of withdrawal as leverage in trade negotiations. During his first term, strong rhetoric ultimately resulted in renegotiation rather than full exit.
Some analysts believe the current uncertainty may serve a similar purpose — to secure stricter enforcement provisions, updated content requirements, or additional concessions from Canada and Mexico.
However, the stakes are high. North American economies are deeply interconnected, and abrupt policy shifts could have lasting consequences.
What This Means for Global Markets
Financial markets dislike uncertainty. Even the suggestion of a potential US withdrawal from CUSMA could:
- Affect currency exchange rates
- Influence stock performance in manufacturing sectors
- Create hesitation among foreign investors
With the July 1 review approaching, businesses across North America are watching closely.
Final Thoughts
While no formal decision has been announced, the possibility of a US withdrawal from CUSMA adds fresh tension to North American trade relations.
Whether this is a negotiation tactic or a serious policy shift remains unclear. What is certain, however, is that the outcome of the July review will shape economic stability across the continent for years to come.
As developments unfold, Network Bharat will continue bringing you verified updates and expert analysis.
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