What Ongoing USMCA Talks Mean for Your Cross-Border Logistics
If your company ships products between the U.S. and Canada and/or Mexico, the United States–Mexico–Canada Agreement (USMCA) has a significant impact on your bottom line. And following the mandatory joint review in July, the state of cross-border trade has shifted from one of long-term stability to potential annual turmoil. In this article, NAD Logistics will cover what your business should know about USMCA, including potential changes that may impact your cross-border operations.
Understanding the United States–Mexico–Canada Agreement (USMCA)
The United States–Mexico–Canada Agreement (USMCA) is the free-trade agreement between Canada, the U.S., and Mexico that replaced NAFTA (the North American Free Trade Agreement) in 2020. Canada calls it CUSMA (Canada–United States–Mexico) and Mexico calls it T-MEC (Tratado entre México, Estados Unidos y Canadá), but they all refer to the same agreement; the content is the same.
While USMCA maintains much of NAFTA’s original framework, it introduced several important changes that affect businesses. These include updated automotive content rules, stronger labour standards, new provisions for digital trade and intellectual property, and simplified customs and shipping processes that can be particularly relevant for small and medium-sized businesses. USMCA also includes enforceable labour provisions aimed at improving working conditions while protecting workers’ rights and wages.
Unlike NAFTA, USMCA includes a dedicated chapter focused specifically on small and medium-sized enterprises (SMEs). Building on Canada’s experience with SME provisions in the 2018 CPTPP, USMCA brought a similar focus into the U.S.-Mexico-Canada trade relationship, with provisions designed to help smaller businesses participate in cross-border trade. Some of the key provisions that can help SMEs navigate international markets include:
Improved access to trade information: USMCA requires each country to maintain free, publicly accessible information about the agreement and provisions relevant to SMEs.
Greater cooperation and networking: The agreement encourages cooperation between SME support organizations, export assistance centres, incubators and accelerators to help businesses share information, research and best practices.
Better access to opportunities: USMCA encourages cooperation on areas such as access to capital and credit, government procurement and international business partnerships.
Support for SME participation in services: The agreement includes provisions aimed at expanding commercial opportunities for SMEs in cross-border services.
An ongoing SME dialogue: USMCA established an SME Committee and an annual trilateral dialogue that allows private-sector stakeholders and other participants to raise issues affecting SMEs.
For businesses moving goods across the Canada-U.S. border, USMCA also introduced a dedicated customs and trade facilitation chapter designed to simplify and modernize customs procedures, improve transparency and reduce administrative burdens.
Digital trade chapter provisions (i.e., customs on digital products, support for e-signatures, and paperless trading) particularly help small- to mid-sized businesses with cross-border trading. Government procurement and services chapters aim for greater transparency, which can make it easier for smaller suppliers to identify and bid on opportunities.
Labour and environment chapters, while not SME-specific, are meant to help level the competitive playing field, which trade advocates argue benefits smaller firms that can't as easily absorb cost disadvantages from lower standards elsewhere.
Importantly, the USMCA also includes a “sunset clause” (article 34.7) which requires a joint review every six years to determine if the agreement will be extended for another 16-year term.
The first such review took place in July of this year – and that’s where the current situation truly began to unravel.
How USMCA Talks Reached an Impasse
While Canada and Mexico formally supported extending USMCA another 16 years, the United States disagreed. The administration declined to renew the agreement in its current form, upending six years of stability that was once expected to continue for at least another decade.
Now, this does not mean that USMCA is gone; it remains in effect through July 2036. However, instead of meeting every six years, member countries now need to meet and review USMCA every year from here on out.
Obviously, this severely shortens the investment and planning horizon for cross-border businesses. What was once a certainty has suddenly become a year-to-year scramble.
After the July review, trade talks shifted from negotiations among all three countries to tense bilateral talks between the U.S. and its neighbors. And while talks with Mexico went on, USMCA discussions between the U.S. and Canada broke down in late August 2026.
The core sticking points include longstanding disputes over automotive rules of origin (with the U.S. demanding a 50% domestic content floor), Canadian dairy quotas, and heightened U.S. scrutiny of third-country transshipments through its northern neighbour.
The sudden breakdown in negotiations has left many business leaders asking: what happens next? The truth is that we don’t know. The situation has become entirely impossible to predict.
While officials say talks have stalled, informal discussions are likely still happening behind closed doors. But we won’t know the substance of those talks until the governments involved decide to share them.
For the time being, there’s no use speculating on rumours. What matters is what’s actually happening right now.
Section 338 Tariffs and Retaliatory Trade Measures
...And what’s happening right now is a major escalation in trade friction.
After bilateral talks broke down, the U.S. administration invoked Section 338 of the Tariff Act of 1930 to impose 50 percent tariffs on about $20 billion in Canadian imports (including machinery, wood, metals, and consumer goods).
Unlike previous trade actions, these measures circumvent the standard USMCA duty-free claims. In response, Canada implemented dollar-for-dollar retaliatory tariffs in September 2026.
For logistics managers, this retaliatory cycle means you can no longer assume your northbound or southbound cargo is immune simply because it was historically duty-free.
The rules of engagement have changed, and your strategy has to change along with them.
What Tariffs Mean for Cross-Border Trade
With all the recent discussion around tariffs, it can be easy for the concept of “free trade” under USMCA to get lost in the conversation. So, does USMCA prevent tariffs? Not entirely. While qualifying goods generally receive preferential, duty-free treatment under the agreement, governments can still impose additional tariffs or other trade measures under separate authorities.
For example, the United States currently applies additional 50 per cent tariffs to certain Canadian imports, meaning businesses need to look beyond USMCA eligibility when determining the duties that may apply to a shipment. “Duty-free under USMCA” does not automatically mean “free from all tariffs” anymore.
For businesses that depend on ongoing shipments between Canada, the U.S., and Mexico, trade uncertainty can create both anxiety and challenges that go beyond the tariff itself. A small change in the cost of importing a particular component can affect purchasing decisions, inventory levels, production costs, and delivery schedules.
If a product becomes subject to an additional tariff, companies must reconsider where they source goods, how they are classified, and whether they have alternative suppliers.
This is where having an organized cross-border logistics process becomes particularly important.
Since we can’t predict the future of these trade talks, the best defense is a good offense based on what we know for a fact. You have to control what you can control.
Businesses should regularly review:
Product classifications: Make sure goods are being classified under the correct Harmonized System (HS) tariff codes. Some goods could arguably fit under more than one code; consider whether it is worth seeking re-classification.
Country of origin: Confirm where products and their components originate, particularly when goods move through multiple countries.
USMCA eligibility: Determine whether products meet the agreement's rules of origin before assuming preferential treatment applies.
Customs documentation: Ensure commercial invoices, certificates or certifications of origin and other required documentation are accurate and complete.
Tariff exposure: Monitor whether products are affected by new tariffs, surtaxes or other trade measures.
Supply chain alternatives: Consider whether sourcing, routing or inventory strategies need to change if trade costs increase.
Border timing: Build realistic timeframes into shipping schedules, particularly when regulatory or customs requirements change.
Exclusion & Exemption Monitoring: Track shifting tariff lists (such as the recent shifts between electrical machinery and metals/lumber) to stay ahead of sudden reclassifications.
Supply Chain De-risking & Third-Party Inputs: Rigorously document raw material lineage to withstand strict new anti-transshipment scrutiny.
Contractual Agility (Incoterms & Surcharges): Review Delivered Duty Paid (DDP) versus Delivered at Place (DAP) agreements so unforeseen retaliatory duties don't suddenly wipe out your margins.
Planning for 1-Year Horizons: Adjust freight procurement and carrier agreements to account for annual July review cycles instead of decades of stability.
The goal isn't necessarily to overhaul your entire supply chain every time trade policy changes. Instead, businesses should have enough visibility into their shipments to spot where a policy change could add costs or delays.
Why Cross-Border Logistics Planning Matters
For companies that move goods across borders regularly, logistics is more than moving shipments from one location to another; documentation, customs compliance, routing, timing, and tariff requirements can all affect final cost and delivery timelines. This matters even more as trade rules continue to change.
The reality is that the July 2026 joint review fundamentally changed the logistics industry. With talks stalled, shippers now face yearly regulatory uncertainty rather than a predictable multi-decade regime.
And the current tariff environment shows that businesses can't rely solely on the assumption that North American trade will always be duty-free. Businesses need to understand the specific rules affecting the products they import or export.
By working with experienced logistics providers, businesses can ensure their partners can simplify this process. A knowledgeable logistics provider can help coordinate shipments, identify documentation requirements, and provide greater visibility into the movement of goods across the border.
Preparing for Continued Trade Uncertainty with NAD Logistics
For more than 30 years, North American Distribution Logistics (NAD Logistics) has been helping customers navigate the complexities of the transportation industry — tariffs and all. Originally founded as Kelron Logistic Group of Companies in 1991, NAD Logistics has consistently delivered on its promise and remained a leader in the industry, demonstrating its reputation as a proactive cross-border partner capable of navigating changing customs enforcement and border delays.
The company’s customer base includes shippers of all types that require transportation of all styles, such as dry vans, refrigerated vans, and flatbed trailers. We offer domestic shipping across Canada and the U.S., as well as international shipping, managing multicarrier capacity and ensuring documentation compliance to prevent costly customs audits and unexpected border holds.
The political landscape is uncertain. But your logistics strategy doesn’t have to be. If you're finding international shipping to be challenging, contact NAD Logistics today.
