Trade Alert: Trump Dismisses USMCA as "Irrelevant," Risking North American Supply Chains

New rhetoric from President Trump regarding the USMCA signals potential volatility for CAD and MXN as supply chain uncertainties resurface.

Trade Deal Under Fire

The stability of North American trade is back in the crosshairs after President Trump dismissed the US-Mexico-Canada Agreement (USMCA)—his own signature trade deal—as holding “no real benefit” for the United States. Speaking at a Ford factory, Trump stated he was indifferent to whether the pact is renegotiated or allowed to expire, explicitly targeting Canada as the undue beneficiary of the current arrangement.

Auto Sector Vulnerability

The rhetoric serves as a direct threat to the integrated automotive supply chains that define the CAD and MXN trading pairs. With the agreement up for mandatory review, the President's stance signals a difficult negotiation ahead, potentially involving new tariffs or quotas.

The uncertainty is likely to weigh heavily on the Mexican Peso and Canadian Dollar, which both rely on duty-free access to US markets. The “sunset clause” in the USMCA means that without consensus, the deal could enter a slow death spiral, bringing back the volatility reminiscent of the NAFTA renegotiation era.

Market Key Takeaways

• Policy Shift: President Trump labels USMCA irrelevant, risking expiration.
• Currency Risks: Significant downside exposure for CAD and MXN due to auto sector reliance.
• Structural Threat: The sunset clause may trigger volatility similar to the NAFTA era.