Automakers warn USMCA review threatens investment in North American automotive supply chains

The North American automotive industry has warned that the US’s decision not to renew the USMCA will threaten investments in the automotive supply chain.

Having declined to renew the USMCA on July 1, the US will now have annual reviews with Canada and America on trade agreements over the next decade, creating more uncertainty for the automotive sector in North America. If at any point the three countries reach a consensus through the annual reviews, the USMCA’s term will be reset for 16 years from that point.

The agreement remains in force and current USMCA trading rules continue to apply. The decision means only that the three governments did not agree to extend the agreement for another 16 years at the first six-year review. Instead, the USMCA now enters an annual review process that could continue until its scheduled expiry in 2036 unless all three countries agree to extend it earlier.

This means the automotive industry could face up to a decade of recurring uncertainty, with OEMs and suppliers potentially having to reassess investment decisions each year until a political agreement is reached. As automotive companies typically make manufacturing and logistics investment decisions over 10-20 year horizons, annual uncertainty over the future trading relationship could delay decisions on new assembly plants, supplier parks and battery facilities.

That concern over prolonged uncertainty is one of the reasons several industry organisations have urged the three governments to reach an extension as quickly as possible.

In a joint statement, groups including the Alliance for Automotive Innovation which represents the likes of Toyota, VW, Hyundai and more, the American Automotive Policy Council which represents GM, Ford and Stellantis, the American International Automobile Dealers Association, the Vehicle Suppliers Association (MEMA), the National Automobile Dealers Association, and the Zero Emission Transportation Association said: 

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“The USMCA is a success story for the entire US auto industry, with billions invested in US production and thousands of manufacturing jobs created since the agreement entered into force. It has also been a success story for American consumers, allowing US automakers to provide families with a wide variety of vehicle choices that fit every budget.

“We urge the leaders of the US, Canada and Mexico to swiftly reach consensus on an extension of USMCA that preserves the existing trilateral partnership, returns to preferential treatment for qualifying goods, and continues the stability and predictability that has helped the industry thrive for the past six years.” 

Mobility Global, formerly known as S&P Global Mobility, said the USMCA review is one of the principal strategic risks facing the North American automotive industry in 2026. Its analysis suggests that prolonged uncertainty over the agreement could influence manufacturing investment, sourcing strategies and production allocation across the highly integrated North American supply chain.

While there is no immediate change to the tariff treatment of vehicles and components traded under USMCA, the industry now faces an extended period of political and commercial uncertainty. The first annual review is expected in 2027, and until the US, Canada and Mexico agree to renew the agreement, automakers and suppliers will be watching closely for any indication that future negotiations could reshape trade in North America.

The annual review process introduces a new layer of uncertainty at a time when OEMs are already balancing electrification, regionalisation and geopolitical risk. While vehicles and parts continue to move under existing USMCA rules, the outcome of future reviews is likely to influence where OEMs and suppliers choose to invest, source and build across North America over the coming decade.