Donald Trump’s comments that he is not looking to renew CUSMA have renewed attention on North American trade relations, but experts say the agreement’s scheduled review process has been anticipated for years and does not signal an immediate end to the pact.
BNN Bloomberg spoke with Michael McAdoo, partner and director of global trade and investment at Boston Consulting Group, about the CUSMA review process, North American supply chain integration and why Canadian companies should continue pursuing new export opportunities beyond the United States.
Key Takeaways
- Trump’s remarks do not change the fact that CUSMA was already scheduled to enter a formal review process under provisions negotiated during his first administration.
- Deeply integrated North American supply chains make it difficult and costly to unwind decades of investment across Canada, the United States and Mexico.
- Ongoing tariff uncertainty is creating challenges for businesses making long-term capital investment decisions.
- Canadian companies are being pushed to improve efficiency and pursue opportunities in markets such as Mexico, India and Europe.
- Reducing interprovincial trade barriers could help strengthen Canada’s economy and offset some potential trade disruptions.
Read the full transcript below:
ROGER: U.S. President Donald Trump says he’s not looking to renew CUSMA. At a media event yesterday, he said, “We don’t need anything that Canada or Mexico has.” Here to break down what this means for Canada is Michael McAdoo, partner and director of global trade and investment at Boston Consulting Group. Michael, thank you very much for joining us.
MICHAEL: Thanks for having me.
ROGER: Okay, does the president need us, or is it accurate?
MICHAEL: Economically, of course, the United States needs two of its four largest trading partners, being Canada and Mexico. And actually, the president didn’t say anything new. There was, under the original CUSMA agreement, which he signed, a renewal clause which said that unless all three parties agreed to renew the agreement on July 1 of this year, a review process would begin, which means the three ministers would get together and decide how to improve the agreement. So that’s been going on since well before July 1, and so there’s really no news in what he said yesterday.
ROGER: So really this is just some posturing again?
MICHAEL: Well, I don’t want to comment on his motives. I just think it’s not new news, and we’re in a review process. I would point out that even the Biden administration signalled that it intended not to simply renew, but actually to try to improve the agreement. So that’s been going on, with more formalized talks with Mexico and also talks ongoing with Canada over the past many months.
ROGER: I mean, essentially that’s healthy, isn’t it? No matter what the agreement is, you have to, even if you have a wedding agreement, you should probably take time to look at it every once in a while and make sure everything’s working for everybody involved.
MICHAEL: That’s right. And, you know, I think when you look at what happened last year, there were those big 25 per cent tariffs announced at the end of January. There was a 30-day pause, and the U.S. actually put tariffs on Canada and Mexico of 25 per cent for exactly 72 hours, and then they came forward with the CUSMA exemption. What happened there was the supply chains in North America are so integrated across the three countries that what the U.S. imports from Canada and Mexico, aside from energy and agricultural products, is actually inputs to U.S. manufacturing. American manufacturers were literally telling the White House, “If you continue with these tariffs, we’ll be sending workers home because we can’t build products with parts that cost 25 per cent more.”
ROGER: Now, could those be disentangled fairly easily, though, if this pressure from the president continues, or are they literally too intertwined?
MICHAEL: I mean, at this point, major capital has been deployed over 30 years, first under the original NAFTA agreement, then later under CUSMA. In a lot of these industries, these capital expenditure decisions are very long term. They can be certainly years and, in several cases, decades. So to unwind that is very difficult.
Also, I think what businesses are looking for is stability in the tariff regime. Let’s say you wanted to do a new capital expenditure project in the U.S. The first thing the board of directors is going to ask management is, “What’s your assumption on tariffs for the inputs for this factory?” Management will say, “Well, at this point it’s all coming in under zero-rated duties from Canada and Mexico under the CUSMA exemption, but there’s a review process, and maybe there’ll be a forced-labour tariff, maybe there’ll be a Section 301 tariff.”
So there’s no certainty on the tariff environment, and it’s hard to make those capital expenditure decisions.
ROGER: But the companies have been doing things, haven’t they? They haven’t just been sitting there waiting, going, “Oh, what’s next? Are we going to have a deal or are we not going to have a deal?” They have been doing things, haven’t they?
MICHAEL: What we’ve seen is companies that have similar facilities across the three North American economies. If you have idle capacity in the U.S. and you’re making something in Canada that you could make there, you might try to move that production to avoid a tariff on steel, aluminum, automotive or some of the tariffs that are still in place and that don’t qualify for a CUSMA exemption.
But in terms of new capital expenditures, actually building a brand-new factory in the United States to build something there, we’ve not seen that. In fact, foreign investment is way up in the U.S., but it’s driven by data centres. If you extract the data centres, other sectors are actually quite far down. So we’re not seeing brand-new capital expenditures happening in the U.S. at this point.
ROGER: For Canadian businesses and companies, to a degree, is this a good thing? This pressure from President Trump, is it getting them to take a look at their companies and see how they run?
MICHAEL: I think anything that forces you to look at where your markets are and where your sourcing is is really important. If you think about a very basic value chain in manufacturing, I source from somewhere, I transform or add value, and I sell somewhere.
We’ve had it really easy selling into the U.S. market, with no impediments to that, over decades. Now, if you’re in the steel, aluminum or automotive sectors, you’ve got a complex web of tariffs to manage. Other sectors are under the CUSMA exemption, as I mentioned.
But this will force Canadian companies to look at their efficiency and at alternative markets. Canada has a fabulous network of free-trade agreements, but we’ve not been as good as we should have been about operationalizing that from a sales, distribution and sourcing perspective. So there’s a lot that Canadian companies can do in this environment.
ROGER: And are we taking advantage of that? That’s been the big push. It got the prime minister elected, essentially, that we’re going to find alternative markets. It’s been more than a year. Are we starting to see movement in that direction? It doesn’t happen overnight, obviously.
MICHAEL: That’s right. If you look at the types of trade missions that have been run, I was part of the Canadian trade mission to Mexico, the largest in history. There were literally hundreds of companies and thousands of meetings, and so those relationships are building.
Mexico is an obvious place for Canada to grow its trade. That side of the North American triangle has been a bit underperforming versus the bilateral relationships involving the U.S.
We’ve also seen a lot happening with India in terms of getting back to a more normal trading relationship with the largest-population country in the world and a strong growth trajectory. Those are ones I look at, and of course Europe is always there. Canada and Europe are very close culturally, there’s a free-trade agreement and there are common languages with several European countries.
So I think those are the bigger markets that Canadian companies should be looking at.
ROGER: And are they moving to it? Do we have that drive in Canadian companies to go beyond the U.S.?
MICHAEL: I think it depends on the company. For certain types of products, there are big opportunities in those markets. For others, due to distance or compatibility, the U.S. will still be an important market.
Let’s be clear, I don’t think we’ll ever be able to get away from the U.S. We’re just too close economically, culturally and linguistically. No one’s talking about necessarily reducing the U.S. It’s about growing those other markets. I think we need to learn to do both of those things.
ROGER: One of the other things that’s been talked about for a while is interprovincial trade barriers. They were going to be torn down and we were going to move between provinces. That seems to have stalled, or is it happening behind the scenes?
MICHAEL: I think the federal government is doing almost everything that it can, and I think some of the provinces are showing a lot of leadership in that area. I would point to Ontario as one that’s been quite open about this.
Over time, people realize that that’s a big opportunity as well. There are some good studies from the University of Calgary about how much that will actually increase Canadian GDP, and that can offset a little of the market access that we might lose to the U.S. over time as this administration continues.
ROGER: All right, but there are challenges to it as well. Michael, we’re out of time. Thank you very much for joining us.
MICHAEL: Thanks for having me.
ROGER: Michael McAdoo, partner and director of global trade and investment at Boston Consulting Group.
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This BNN Bloomberg summary and transcript of the June 11, 2026 interview with Michael McAdoo are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
