Marsh outlines trilateral renewal, side deals or termination scenarios for trade pact
US, Canadian and Mexican officials remain locked in negotiations over the future of the Canada-United States-Mexico Agreement, with the 2026 review process now expected to stretch beyond the third quarter and possibly longer.
That assessment comes from Marsh Risk, whose updated analysis lays out three scenarios it considers most plausible for the pact's future, along with early warning signs companies can watch for under each.
The first scenario involves all three nations agreeing to a reworked deal. For that to happen, Washington would need Ottawa and Mexico City to accept substantial concessions, yet no three-way talks had taken place by the end of May, nor were any scheduled.
Among Washington's central demands are a higher domestic-content threshold for vehicles, tougher enforcement of labor and steel standards, and closer alignment of Canadian and Mexican tariff and investment-screening policies with US positions. Marsh said a sign this path is gaining ground would be the scheduling of formal US-Canada review meetings, or any softening of Washington's vehicle content demands.
Hardest scenario
The second scenario sees the agreement carry on unchanged through 2026 without a renewal being struck, while each country instead works out narrower, separate arrangements on specific points of friction.
Absent a formal extension or exit, the existing pact remains binding until 2036. Marsh described this as potentially the hardest scenario for businesses to track, given the difficulty of monitoring emerging side deals and how they interact with existing compliance rules.
A standalone US-Mexico agreement on specific issues, or US messaging suggesting renewal is not a near-term priority, would point toward this outcome.
US exit
The third path involves Washington walking away from the agreement entirely in favor of individual bilateral arrangements with each neighbour.
Marsh said the current administration favors direct, executive-led negotiations that bypass Congress, and that two structural features of the existing pact, its trilateral nature and the requirement for congressional approval of major changes, are particularly unpalatable to officials. Still, the firm flagged factors working against termination, including the political risk of an exit notice before November's midterms and the likelihood of prolonged legal challenges.
A shift in US messaging toward describing the agreement as fundamentally broken, rather than merely needing repair, would suggest termination is becoming more than a negotiating tactic.
Marsh cautioned that countless variations of these three paths are possible, and that whichever direction the review takes, companies should not expect a tidy resolution. A continued period of elevated trade tension looks likely, with little prospect of returning to the calmer policy environment that existed before 2025. All three governments, the firm said, appear willing to keep using regulatory powers to steer trade in ways that depart from the more hands-off approach of past decades.
The firm framed the underlying choice facing Washington as one between a "fortress North America" approach, integrating continental supply chains behind shared external barriers, or a "fortress USA" strategy involving either non-renewal with side deals or outright termination.
Preparation
To prepare, Marsh recommended companies assemble a cross-functional working group to track political developments, develop and continually update an internal view on which scenario is most likely, and identify vulnerable points in their supply chains before major policy shifts take effect.
The firm also urged proactive engagement with policymakers through public comment processes and advised managing rising credit risk among trading partners during the period of instability, suggesting trade credit insurance as a tool to shift exposure to unpaid receivables off company balance sheets.
