Yes, regarding this particular topic I am immediately surrounded by all of those external voices, even internal, telling me of how ridiculous it would be for the US to follow through and pull out of the USMCA. My response of course is noting that I probably wouldn’t have given the topic a second thought had the President of the United States not mentioned that this was a consideration regarding the upcoming July 2026 USMCA review. It falls in line with him also mentioning more than a dozen times at this point that we do not need Canada. Carney is reporting at the recent G7 meeting that he and Trump have had several conversations about AI, Iran, Ukraine, the economies, etc. In between the insults Carney is once again taking the high road based on the obvious mutual benefits to the economic relationship, and if anyone was to dig into the trade data to date between the two countries, one would surmise that we do in fact need Canada, as well as Mexico. So, for my own satisfaction, and possibly a large majority of others in the trade community, I feel an obligation to outline the economic carnage that would result from a US exit, and to say it out loud, that this move by the administration if ever put into play would be beyond insane. Besides, as we all know, or have come to learn, a major part of the “Art of the Deal” written by Trump in 1987 is to initially threaten disaster like consequences if one does not capitulate to the upcoming demands. Afterall, negotiation is about dominance and power and not compromise. Speaking of negotiations, enter here a flood of negative comments regarding the outcome of the US-Iran one-sided MOU, and at the time of this writing JD Vance (as punishment for not backing the administration on the decision to go to war) was in Switzerland picking up the pieces and reporting that the discussions are going great, absolutely wonderful, couldn’t be better, all capped off with cake and ice cream and party favors. What pops into my head is the original spiritual meaning of a true kumbaya moment which is a spiritual cry for divine intervention during a time of hardship, but has since taken on a rather sarcastic modern interpretation (my preference) referring to an idealistic and naïve attempt to create peace, harmony, and superficial unity in a situation where there is really very little hope for any such outcome. Of course, actions will speak far louder than words, or what is written on paper at the conclusion of the talks, and it goes without saying at this point, but I will anyway, Israel, isn’t at the table, and agrees with very little regarding the current US position, making them a rogue partner in the mix, but that is an entirely separate article that I will leave to one of the other authors at the firm. No cake and ice cream for Bibi.

As some of you know very well, I digress, but I usually have CNN on in the background just to keep up with the hourly updates around the world. Now, about the USMCA, let me begin with stating that the USMCA is critically important to the economy of the United States. Many incorrectly assume that the largest trade relationship in the world is the US and China, but that doesn’t even come close to the U.S., Canada, and Mexico trade at roughly $2 trillion in goods and services being exchanged annually. This is even bigger than U.S.–EU trade as well, including any other bilateral or trilateral trade relationship. The EU Council reports that EU–US trade in goods and services reached over €1.77 trillion in 2025, so close, but no cigar.

In the big picture, the largest trade relationships in the world (by total trade value) are the United States and Mexico, with total trade in 2025 of $872 billion, representing $338 billion in exports to Mexico, and $534 billion in imports, also making Mexico the United States’ #1 trading partner. When it comes to Canada, it’s almost identical in two-way trade with $719 billion in 2025, representing $336 billion in exports to Canada, and $383 in imports. Honorable mention is of course China-US at $414 billion in two-way trade. Exports to China in 2025 were $106 billion, and imports were $308 billion.

So, class, let’s put our thinking caps on even though this one is easy. Billy, what color is yours today? Honestly, if it’s Billy I knew from 3^rd grade, it was rainbow, but that’s beside the point. Pulling out of the USMCA would not literally be a “death sentence” for the U.S. economy, but it would be a self‑inflicted, long‑term deep seeded wound to U.S. manufacturing, exports, supply chains, as well as geopolitical leverage, and quite frankly we need whatever leverage we can keep, with whatever country at this time in history. It wouldn’t come in the form of an instant collapse, but instead a layer-by-layer unraveling of all of the benefits the trade agreement enables. Two words stand tall, tariff-free. Well, not entirely tariff-free as there are a few exceptions, but for the most part the USMCA has allowed North America to function like one massive integrated factory.

To get a little more specific, the USMCA is deeply integrated auto, agriculture, energy, and manufacturing supply chains that have been built over the last 30+ years from the origins of NAFTA to today’s USMCA. If the U.S. terminates USMCA tariffs snap back to “most‑favored nation” (MFN) levels under WTO rules, which would be around 3% for U.S. imports, and 6–7% for Canada/Mexico. That would of course trigger the baseline protectionist U.S. administration who would layer 10–15% across‑the‑board tariffs, with even higher rates on autos, steel, etc. This in turn would trigger Canada and Mexico to retaliate, targeting politically sensitive U.S. exports (agriculture, autos, machinery), which then triggers higher prices, disrupted supply chains, and lost export markets. If we take a look at who gets hit the hardest it’s going to be the automotive industry, followed by agriculture and border manufacturing. As an example, a typical auto part crosses the U.S.–Mexico or U.S.–Canada border 6–8 times before final assembly, and if it’s a high‑complexity component like an engine, transmission, or wiring harness, 8–12 crossings is common. In a full vehicle supply chain, some vehicles involve 30+ cross‑border movements when you count sub‑components, sub‑assemblies, and tier‑2/tier‑3 suppliers. Agriculture states in the Midwest and Great Plains also take a beating since Canada and Mexico are top buyers of U.S. corn, soy, meat, and dairy. Yes, American farmers in 2025 are doing better financially than in 2024, but the improvement is driven heavily by government subsidies rather than stronger market conditions. Border and manufacturing states (TX, CA, AZ, NY) who are deeply tied to cross‑border logistics suffer as well. There would be plant closures, job losses, and investment flight in exactly the regions that depend on North American integration. That investment flight goes far beyond the US as the collapse of predictability pushes long‑term investment toward Mexico–EU, Canada–EU, and Asia‑centric supply chains instead. So, the cost isn’t just today’s GDP hit, but it’s future factories that never get built in the U.S. The US would also see a permanent loss of North American manufacturing share to Europe and Asia. Keep in mind here as well that estimates of between $650 billion -$750 billion is what is created within the USMCA region in the automotive sector alone in value based on USITC and USTR  production and trade data.  If the USMCA went away there would be an estimated $80–$160 billion per year loss in value across North American auto production via lost output, lost profit margin, and canceled investments.

All of this large scale economic carnage does beg the question, what actually happens to an importer or manufacturer the day USMCA dies? Our law firm has spent countless hours over the years qualifying importers products for admission to the USMCA, which has in turn saved businesses millions of dollars vs tariffs that otherwise cut into profits. Without the USMCA, trade with Canada and Mexico defaults back to WTO MFN rates. (World Trade Organization-Most Favored Nation)

This means, for a typical importer of the goods below, tariffs get attached to the classification:

• Auto parts: 2.5%–6.1%
• Trucks: 25%
• Agriculture: 5%–45%
• Textiles: 10%–32%
• Steel/Aluminum: 0%–7% (plus any national‑security tariffs)

Once the Trump administration adds layers of additional “national security” or “reciprocity” tariffs, which is extremely likely, you’re suddenly looking at 10–25%+ on goods that were duty‑free the day before. One must also take into account that pricing models break down, and contracts will become unprofitable along with a supply chain that is no longer predictable. (I use the term predictable here loosely as with the Trump administration it’s unpredictability that is the norm) Manufacturers rely on stable rules of origin and zero‑tariff cross‑border movement and without USMCA, every cross‑border shipment now becomes a dutiable import. In addition, every part now needs full-origin documentation creating a need for re-certification, putting every shipment at risk.  One would also now need new supplier affidavits, classification reviews, broker instructions and internal controls.       

Importers could expect 20–40% higher compliance overhead as carriers raise rates due to border delays increasing and Customs exams. They would expect 5–15% higher freight costs on cross‑border lanes.  Canadian & Mexican suppliers ultimately become less competitive. If you’re a manufacturer using North American parts, you lose duty‑free inputs, just‑in‑time reliability, and integrated production cycles. BOM cost rises, lead times stretch, and inventory requirements balloon.

If you’re a U.S. manufacturer selling into Canada or Mexico your goods become more expensive, your competitors in the EU and Asia gain advantage, and your distributors start shifting sourcing to more advantageous countries. An importer now stands to lose market share in the two countries that buy more U.S. goods than China, Japan, and Germany combined.

 As previously mentioned, retaliation will also become a reality as both Canada and Mexico will target agriculture, machinery, autos, energy products and consumer goods. Nobody wins in this scenario as competitors outside North America gain the advantage, such as EU suppliers gaining tariff‑free access to Canada, Asian suppliers gain tariff‑free access to Mexico, and U.S. suppliers lose preferential access to both. It’s like losing home‑field advantage in your own hemisphere.

Also worthy of a mention, the USMCA protects millions of U.S. jobs in manufacturing inclusive of autos, machinery, aerospace, electronics, and agriculture. Energy jobs in oil, gas, and electricity and logistics jobs in ports, trucking, rail, and warehousing also take a hit. In my state of Texas alone, over 1.2 million jobs depend on North American trade, and we’re no slouch as Texas moves more international trade than any other state, and at annual value of $520 billion. On the global stage the USMCA gives the U.S. leverage against China, as long as it stays a unified economic bloc. It prevents China from using Mexico or Canada as a backdoor, and limits China’s ability to dominate supply chains in the region. Imagine if the US had no influence over Mexico’s trade with China, and BYD did end up building their mega factory there. Would BYD have a better chance of creeping into the US market given the close proximity? Apparently, Carney whispered in Trump’s ear at the G7 (picked up on a hot mic) that he was allowing China to export 49,000 EV’s into the Canadian market. Trump said he thought that was a good idea. Imagine that…he was not only cordial to Carney but also agreed with him.

Let’s face the facts. the USMCA is the foundation of the North American economy. It protects U.S. jobs, keeps prices stable, strengthens supply chains, and gives the U.S. strategic leverage in a world where economic blocs matter more than ever. To walk away from it, to coin a phrase from N. Carolina Senator Thom Tillis, would be “stupid on stilts.”

If you are so inclined, I also wrote about the other various scenarios with the upcoming USMCA review a few months ago: https://www.braumillerlaw.com/the-upcoming-usmca-cusma-t-mec-review-the-options-are-a-renegotiation-a-few-revisions-or-a-formal-exit/