Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He graduated with a degree in Business Administration, has over a decade of writing experience, and grew his personal portfolio 153% from 2020 to 2024.
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Today marks the sixth anniversary of CUSMA — the Canada-United States-Mexico Agreement — taking effect on July 1, 2020. That anniversary triggers a built-in joint review of the trade agreement. The three governments are expected to formally launch the review process on or around July 1, 2026, after months of internal consultations and bilateral talks.
For Canadian investors, this isn’t just trade policy noise. The review outcome will shape cross-border commerce, tariff exposure for major TSX sectors, and the loonie’s trajectory. Here’s what you need to know.
What the CUSMA Review Is
CUSMA (also called USMCA in the United States) replaced NAFTA in 2020. The agreement includes a sunset clause with a built-in review mechanism.
If all three countries agree to renew the agreement at the six-year mark, CUSMA stays in force for another 16 years, with the next review scheduled for 2032. If renewal stalls, the agreement shifts into a period of annual reviews. Worst case: one or more parties withdraw, putting the agreement on a path toward possible expiration in 2036.
Canada’s stated position, per reporting from Al Jazeera and CBC News: the government is seeking a 16-year renewal, with separate discussions on sectoral tariffs running in parallel.
Formal negotiation rounds are already underway. A first US-Mexico bilateral round concluded in late May 2026, covering auto rules of origin, steel and aluminum tariffs, and economic security provisions. Some early rounds have proceeded without Canada at the table.
Other contentious items flagged by analysts at CSIS and Brookings include regional content thresholds (rules of origin) and how the three countries treat China in non-market-economy provisions.
Why Tariffs Are the Real Issue
The US has imposed tariffs on Canadian steel, aluminum, and autos that have weighed on the economy. Addressing these sectoral tariffs is described by Canadian officials as essential, and the talks are meant to run in parallel with the broader CUSMA review.
Tariff uncertainty is exactly what the Bank of Canada keeps citing as a reason to stay on hold with interest rates. As we noted in our mid-year TSX outlook, trade-policy overhang is a persistent drag on business investment and growth forecasts. The BoC’s June 10 statement explicitly mentioned “uncertainty about US trade policy” as a reason the economy remains weak (data as of July 1, 2026).
The connection is direct: unresolved tariffs depress activity in trade-exposed sectors, which in turn keeps the BoC cautious on rate cuts. For more on the BoC’s thinking ahead of its July 15 decision, see our preview here.
Which TSX Sectors Carry the Most Exposure
Not all Canadian stocks care equally about CUSMA.
Most exposed:
- Autos and auto-parts suppliers — directly named in tariff talks and rules-of-origin disputes.
- Steel and aluminum producers — explicitly targeted by US tariffs.
- Cross-border industrials and manufacturing — any company with significant US revenue tied to treaty terms.
Relatively insulated:
- Canadian banks — the Big Six earn the majority of revenue domestically.
- Telecoms — largely domestic operations.
- Utilities — regulated, geographically constrained businesses.
- Grocery and consumer staples — most revenue earned inside Canada.
Energy: oil and gas prices trade on global supply and demand more than treaty terms, but pipeline volumes and cross-border infrastructure still matter. Energy exposure is moderate, not negligible.
The takeaway: if your portfolio tilts heavily toward domestically-focused names, CUSMA headlines may rattle the TSX Index but not your holdings directly.
What Analysts Expect
Base case, per RBC Economics and other major Canadian banks: the agreement is likely to remain broadly unchanged. A full breakdown or withdrawal is not the consensus view.
But the timeline matters. Annual reviews create ongoing headline risk. Sectoral tariff fights — especially on autos, steel, and aluminum — will generate volatility even if the broader agreement renews smoothly.
The Canadian dollar is particularly sensitive. A smoother renewal is CAD-supportive. A contentious, drawn-out process is a risk. If you hold US-listed stocks or cross-border positions, currency swings may matter more than the treaty itself.
How to Think About This as an Investor
Three principles:
First, don’t overreact to headlines. Trade negotiations are designed to be noisy. The base case is renewal with modest tweaks, not collapse.
Second, understand your portfolio’s exposure. If you own auto suppliers or steel producers, you have direct tariff risk. If you own Canadian banks and telecoms, you don’t.
Third, remember that diversification smooths out sector-specific shocks. A balanced Canadian portfolio — mixing domestically-insulated sectors with globally-traded commodities and US-exposed industrials — doesn’t panic when one sector faces uncertainty.
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What Happens Next
The joint review is expected to formally launch in July 2026. Negotiation rounds will continue through the summer and fall. Key milestones to watch:
- September 2026: progress reports from bilateral rounds.
- December 2026: preliminary signals on whether a 16-year renewal is on track.
- Early 2027: formal renewal decision or shift to annual review mode.
Sectoral tariff talks — especially on autos and steel — may move faster or slower than the broader review. Those are the headlines most likely to move individual TSX stocks.
Between now and then, expect volatility on trade-related news. If you’re a long-term buy-and-hold investor, that volatility is noise. If you’re trading around positions, tariff headlines are the catalyst to watch.
CUSMA’s review begins today. The outcome will shape the next decade of North American trade — and the Canadian stocks tied to it.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.
Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He holds a degree in Business Administration and has over a decade of writing experience. Nick began investing just before the COVID-19 market crash in March 2020, growing his personal portfolio 153% by 2024. In 2022, he founded Best Canadian Stocks to make data-driven investing accessible to all Canadians. His goal is to help all of his readers achieve financial freedom, maximize their spending power, and reach their financial goals. Whether you're maximizing your TFSA, building an RRSP to save for retirement, or looking to buy your first stock, Nick has your back. His work covers Canadian equities, dividend investing, tax-advantaged accounts, and personal finance.
