Trade agreement reviews rarely make for exciting reading, until the review in question governs the terms under which a huge share of Canadian business, exporters and importers alike, actually operates. The current CUSMA review is exactly that kind of review, and it began, as scheduled, on July 1, 2026.

Key Takeaway

CUSMA's built-in sunset clause requires a joint review by Canada, the US, and Mexico every six years, beginning July 1, 2026. The three parties can agree to extend the agreement 16 years to 2042, fall into a pattern of annual reviews continuing to the agreement's 2036 expiry, or a party could move toward withdrawal on six months' notice. No outcome is yet determined, and Canada's stated position is preservation of the agreement.

What The Joint Review Actually Is

When CUSMA took effect on July 1, 2020, it included a novel sunset clause, at the US's original insistence, requiring the three member countries to jointly confirm every six years whether they wish to extend the agreement[1]. Under Article 34.7, unanimous agreement extends CUSMA for another 16 years, through 2042. Short of that, the countries enter a pattern of annual reviews for the remainder of the agreement's term, which otherwise expires in 2036[1].

The Three Possible Outcomes

Trade policy analysts have generally framed the review around three plausible paths[2]:

Path 1

Extension With Amendments

All three parties agree to extend, likely alongside negotiated changes addressing specific friction points raised during the review.

Path 2

Annual Review Limbo

No consensus on extension, triggering a recurring annual review process that continues uncertainty rather than resolving it, with the agreement remaining in force throughout.

Path 3

Withdrawal

Article 34.6 separately allows any party to withdraw from CUSMA at any time on six months' written notice, a lever that exists independent of the review process itself.

Canada's Minister responsible for Canada-US trade has stated Canada "absolutely" wants CUSMA preserved, and Canada's chief trade negotiator has publicly characterized the July 1 date as a checkpoint rather than a hard deadline[2].

The Known Friction Points

The US Trade Representative's 2026 National Trade Estimate report, released March 31, 2026, outlined specific US concerns entering the review, including dairy supply management and tariff-rate quota administration, digital regulation including the Online Streaming Act, customs facilitation, government procurement rules, and non-market economy supply chain exposure[3]. Canada's since-repealed Digital Services Tax featured prominently in trade tension leading up to the review, even though the DST was formally repealed via legislation receiving Royal Assent March 26, 2026, and the CRA has confirmed it will refund the roughly $647 million collected before cancellation[4].

Why This Affects A Business That Doesn’t Export

A business with no direct US sales can still feel the effects of this review indirectly, through a supplier whose input costs shift, a customer whose own export costs change, or broader economic uncertainty that professional forecasters have specifically flagged as an "invisible tax" on investment and hiring decisions regardless of whether a given business trades across the border directly[2]. Businesses in transportation, manufacturing, and any supply chain touching cross-border movement of goods face the most direct exposure to changes in customs procedures, origin verification, or tariff-rate quota administration specifically flagged as review priorities[1].

What To Actually Do Right Now

Professional advisory commentary has consistently recommended the same practical steps regardless of which of the three outcomes eventually materializes[1]: stress-test how dependent your business genuinely is on CUSMA-preferential treatment, review contracts and intercompany agreements for goods and services for how easily they could adjust if terms change, and strengthen documentation around product origin, valuation, and any related-party pricing in case of heightened customs scrutiny during the review period. None of this requires predicting the outcome, it simply reduces how exposed the business is regardless of which path the review actually takes.

Frequently Asked Questions

Is CUSMA definitely ending or changing?
No outcome has been determined. The review process, which formally began July 1, 2026, could result in extension, a continued annual review pattern, or in principle, withdrawal by any party. Canada has stated its position is to preserve the agreement.
Does the review affect the agreement's terms immediately?
The review itself is a process, not an immediate change. Any actual amendment would require negotiation and agreement among the three parties, which takes time beyond the review's start date.
Is Canada's Digital Services Tax still a factor in the review?
The DST was formally repealed via legislation receiving Royal Assent on March 26, 2026, with CRA refunding amounts already collected. It remains part of the broader trade tension narrative even though it is no longer active.
What should a business with no direct US exposure actually do?
Even businesses without direct cross-border sales can benefit from understanding how exposed their supply chain and customers are to CUSMA-related changes, since indirect effects through suppliers or broader economic uncertainty are real.
IB

About The Insight Bureau Research Desk

The Insight Bureau is GSH Financial's research publication, written by our corporate tax practice for Canadian business owners with cross-border exposure. This article reflects the CUSMA joint review as it stood at the time of publication and is not a prediction of its outcome; see References below.

References

  1. PwC Canada. (2026). Tax Insights: Preparing for the CUSMA 2026 review, US trade concerns and implications for Canadian businesses. pwc.com/.../preparing-cusma-2026-review
  2. CPA Ontario. (2026, May 22). CUSMA in review: Three scenarios for July. cpaontario.ca/insights/blog/cusma-review-2026-scenarios
  3. Office of the United States Trade Representative. (2026, March 31). 2026 National Trade Estimate report. ustr.gov
  4. Wikipedia. (2026). Digital Services Tax Act (Canada). en.wikipedia.org/wiki/Digital_Services_Tax_Act_(Canada)

This article discusses an active trade policy process and reflects publicly available government and professional commentary current as of publication. It presents the situation evenhandedly and does not offer an opinion on the merits of any negotiating position. It is not trade, legal, or customs advice, consult a qualified trade advisor for guidance specific to your business.