What the Review Is
USMCA includes a built-in 6-year review clause (Article 34.7). At the review, each country decides whether to extend the agreement for another 16 years or request modifications. If all three agree to extend, the agreement continues with a new 16-year term. If any country declines to extend, the agreement enters a declining period and terminates after 10 years unless renewed at a subsequent review. This is not an academic exercise. The political and economic context in all three countries has shifted significantly since 2020.
What Could Change: Rules of Origin
Rules of origin determine which goods qualify for duty-free treatment under USMCA. The auto industry is the highest-stakes sector — USMCA requires 75% regional value content for passenger vehicles (up from 62.5% under NAFTA). If these thresholds increase further, some manufacturers may lose USMCA eligibility, face new tariffs, or need to restructure supply chains. Textile and apparel rules (yarn-forward), agricultural market access, and digital trade provisions are also on the table. For shippers, changes to rules of origin mean changes to which goods cross duty-free and which face new costs.
Border Operations at Risk
USMCA includes provisions that have improved border efficiency: pre-clearance programs, mutual recognition of trusted trader status (CTPAT/OEA), a 25% reduction target for border wait times, and digital customs documentation standards. If the agreement is weakened or enters a termination period, these operational improvements could unravel. Border wait times at Laredo, Windsor-Detroit, and other major crossings could increase, adding transit time and cost to cross-border freight.
Four Possible Outcomes
Scenario 1: Clean extension. All three countries agree to renew for 16 years. This is the status quo — no changes, maximum stability. Probability: moderate. Scenario 2: Extension with modifications. Countries agree to extend but negotiate updates to specific chapters — likely automotive rules of origin, digital trade, and labor provisions. Probability: highest. Scenario 3: Partial withdrawal. One country (most likely the US) declines to extend specific provisions while maintaining the core agreement. Unprecedented but possible. Scenario 4: Non-extension. One or more countries decline to extend. The agreement continues but enters a 10-year declining period with increasing uncertainty. Probability: low but non-zero.
How to Prepare
First, audit your USMCA exposure. Identify which of your products rely on USMCA duty-free treatment and calculate the tariff cost if that treatment were lost. Second, verify your rules-of-origin documentation is current and defensible — if rules tighten, you want to be able to demonstrate compliance. Third, diversify sourcing where practical. If a critical component comes from a single North American supplier and USMCA changes make that component dutiable, having an alternative source reduces risk. Fourth, stay informed. Trade policy announcements will accelerate as July approaches. Your logistics partner and customs broker should be providing updates as the review progresses.
Celsius Connect keeps our customers informed on trade policy changes that affect their freight. If you ship cross-border and want to prepare for the review, we can walk you through your exposure.