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CUSMA renewal - Update June 3, 2026

Over the last few days, there have been a number of developments regarding the renewal of CUSMA - the Canada United States mexico Agreement. 

Before that, little public information was available about the status of the discussions  - especially between Canada and the US.

We have had a number of questions from member firms:

1. The main issue for this sector to date has been whether the apparel and textile rules of origin and TPL are actively being reviewed.  To date the answer is no. 

2. The second question has been whether the agreement as a whole is likely to be renewed in its trilateral form or if we will have separate bilateral agreements between the three countries. At this stage, we believe that the agreement will be renewed as a trilateral deal.

3. Third, over the last few months, many companies have raised concerns that Mexico is in a superior position to Canada regarding the status of its negotiations with the US.  Despite the fact that more formal discussions are taking place between Mexico and the United States, this has more to do with the fact that the US has many more issues (drugs, cartels, labour standards etc) with Mexico than they do with Canada. The US would also prefer NOT to discuss key issues for Canada: steel, aluminum and other sectoral tariffs.

4. Finally there has been concern that new Section 301 tariffs based on concerns with forced labour might be imposed on CUSMA-compliant products. While US actions in this area are not yet finalized, the current USTR proposal (released on June 2, 2026) exempts CUSMA-compliant products.

Here is a summary of the current CUSMA renewal status, prioritizing the most recent and significant developments:

• Apparel/Textile Rules: There is no evidence that apparel or textile provisions (including rules of origin and TPL) are under negotiation. This has been confirmed by Canadian officials and US industry.

• Agreement Structure: In our estimation, 90% or more of the agreement, including its trilateral structure, is likely to remain intact. While negotiations may stretch into late 2026, the renewal process will not be a wholesale rewrite of the agreement. We have always argued for minimal changes. In particular, the US may be sensitive to the fact that Congress will need to ratify changes - and the Republicans may no longer be in control of Congress after November.

• High-Level Engagement (June 2, 2026):  Dominic Leblanc, Minister responsible for Canada-U.S. Trade, Intergovernmental Affairs, Internal Trade and One Canadian Economy was in Washington to meet with United States Trade Representative Jamieson Greer.  In the press conference following the meeting, he pointed out that Canada and the United States were engaging in meaningful discussions, and the pace of those discussions was increasing.

• Forced Labour Tariff (June 2, 2026): The USTR has proposed that Canadian products compliant with CUSMA would be exempt from the 10%-12.5% forced labor tariffs the US plans to impose on many trading partners. This removes a significant source of uncertainty in the negotiations. 

• Link to USTR announcement. 

• The USTR has proposed the implementation of these new tariffs that will likely be effective when, or shortly after, Section 122 tariffs (10%, currently in place) expire in July.

• Please note that even though CUSMA-compliant goods are to be exempt from forced labor tariff measures, Canada's forced labor policies were criticized in USTR's review, and it is possible that the CUSMA exemption could evaporate in the future.   So, at some point in the future, the 10% forced labor tariffs could be placed on CUSMA-compliant goods. So we have dodged a bullet for the time being, but the Canadian government will introduce new measures to combat imports of goods containing forced labor and thereby pre-empt such actions by the US.

• In a statement made on June 3, Minister Leblanc stated: “Canada has a robust regime to protect against forced labour practices, and we will soon be taking action to make it even stronger, including through the introduction of new legislation this month, while continuing to work closely with our trading partners.”

• 2026 Renewal - In the agreement, the consultation/renewal scheduled for July 2026 provides three options:
   
  • renewal as-is for an additional 16 years on July 1, 2026; 
  • renewal for 10 years with annual reviews, and finally
  • the option for one of the parties to withdraw from the agreement.

• Request for renewal: both Canada and Mexico have formally asked for the agreement to be extended by 16 years. 

  • In his remarks on June 2, 2026, Minister Leblanc indicated that the parties are free to renew the agreement as they wish if there is consensus. For example, it might take a number of months to iron out all the details, and at that point, there would be nothing to prevent the three countries from renewing the agreement for 16 years. Bottom line: July 1, 2026, is an important milestone, but it is not a hard and fast deadline.

• Sectoral Tariffs: While apparel and textiles seem stable, other sectors are currently subject to punitive Section 232 tariffs (steel/aluminum etc.).  Canada will be hard-pressed to agree to a deal that allows these to remain in place without any modification.   It may be the case that all of these changes can be "resolved" through bilateral undertakings outside of the agreement (making changes to the text of the agreement quite minimal and increasing the likelihood of speedy Congressional approval).

As the July 1 joint review approaches, CAF will continue to monitor negotiations and consult directly with Canadian trade negotiators and U.S. industry counterparts.

Contact Bob Kirke, bkirke@apparel.ca, if you have any questions.