USMCA: Why trade renegotiations could spark volatility in 2026

Fred Schultz, Senior Director of Equity Research – Ameriprise Financial 

February 13, 2026

A major North American trade deal will be renegotiated this summer, and the outcome could have significant implications for U.S. stocks in 2026 and beyond. 

On July 1, 2026, the United States-Mexico-Canada Agreement (USMCA) is up for review and changes to the pact are widely expected as the countries involved seek to address ongoing trade tensions.  

Here’s what to know about the USMCA and how its renegotiation could impact markets and your portfolio: 

What is the USMCA? 

The USMCA is the hallmark trade agreement that replaced the North America Free Trade Agreement (NAFTA) in 2020. It establishes trade rules between the U.S., Canada and Mexico and covers the exchange of multiple goods, including: 

• Cars and trucks 
• Dairy products and agricultural goods 
• Lumber and forest products 
• Steel and aluminum 
• Energy products like crude oil and natural gas 
• Digital technology and services 

Why is USMCA being renegotiated? 

Although the USMCA is officially set to expire at the end of 2036, the agreement requires a formal six-year review, which is scheduled for July 2026. Essentially, July 2026 is a “checkpoint” at which all three countries must agree to extend the deal for another 16 years, or risk entering annual renewal cycles, which could inject uncertainty into the markets. This summer's review is essential for confirming the long-term stability of North American trade. 

What should investors watch in the upcoming negotiations? 

Revisions to USMCA are likely to address U.S. political and economic priorities. There are three major points of trade conflict that the U.S. will likely be attempting to address this summer: 

1. Automotive “rules of origin”: The most contentious – and significant – point of debate this summer will likely involve the "rules of origin," which define how much of a vehicle must be manufactured within North America to qualify for tariff-free trade. Over the past 50 years, auto parts and production have been relocated from the U.S. to Canada and Mexico to a significant extent. All sides would like clear definitions of content percentages assembled on a cross-border basis. Further, an extended delay this summer could disrupt the normal planning for new models and the securing of raw materials like aluminum and steel. 
2. Agricultural products remain a friction point between Canada and the U.S., with the latter wanting to see better market access and protection for U.S. farmers. Additionally, energy flows have become a growing issue between the U.S. and Mexico, as energy is increasingly considered a matter of national security in the U.S.  
3. Labor standardization: Equal enforcement of labor rights and protections are widely seen as a pressing issue that USMCA needs to address. Right now, all parties are concerned about the impact of artificial intelligence (AI). However, we believe the AI topic is too fresh to establish standing rules at this moment and could be an area all sides agree to modify at a future date as a carve-out of any settlement. 

What could a successful renegotiation look like? 

In our view, here are a few possible outcomes of this USMCA’s six-year review: 

1. The ideal outcome would be an extension of the new USMCA for another 16 years to 2042. This would allow cross-border commerce to allocate capital to expanding and improving the current flow of goods across North America. 
2. A less optimal outcome, but still possible scenario, would be setting the USMCA on a path toward expiration over the next decade. This could trigger a new post-USMCA deal based on an additional 10 years of commerce and outcomes. 
3. The adverse outcome for all three countries involved would be a scenario of annual summer reviews. This carries an extremely low probability, but would create an untenable capital investment environment, given that the trade rules could change every year going forward. 

Bottom line: Markets hate uncertainty and stability in North American trade dynamics would allow the normal flow of capital expenditures (capex), currency hedging and the development of more efficient supply chains. In turn, consumers would ultimately benefit too: If there is certainty and stability for businesses that rely on cross-border commerce, the flow of goods becomes more affordable, especially for dairy and food prices. 

How USMCA changes could impact your portfolio 

Here’s an overview of the sectors and industries that may be affected by a renegotiation of USMCA: 

• Steel and aluminum: We favor domestic producers if tariffs remain or tighten, which supports pricing power, while import-heavy manufacturers could see cost inflation. 
• Automobile and machinery: Higher rules of origin favor U.S. assembly and suppliers, especially in the U.S. and Mexico. However, global original equipment manufacturers with more complex sourcing could experience margin pressure. We expect nearshoring to accelerate demand for industrial equipment and automation, benefiting U.S. manufacturers. Again, machinery that relies on imports could face higher costs and margin compression.  
• Chemicals: Chemical and fertilizer firms in the U.S. benefit from tariff protection and potentially lower energy costs, while benefits for Canadian producers are more uncertain. 
• Dairy and agriculture: U.S. farmers could get expanded access to Canada’s dairy markets, but there is a risk of retaliatory tariffs for packaged food and alcohol exporters. Stay focused on domestic staples and discretionary names, but we suggest caution regarding consumer staples firms with significant exposure to Canada or Mexico. 

Why USMCA could ignite ‘fireworks’ in the markets  

Political rhetoric will likely heat up as July approaches, and periods of volatility may accompany it. However, investors should take solace in the fact that the trade negotiations are similar to a fireworks show: While there are lots of loud noises and flashing lights, the display is ultimately a safe endeavor. Thus, it’s our view that the probability of a complete trade collapse is extremely remote. 

As such, investors will want to stay fully invested despite potentially increased volatility, especially in the sectors and industries we highlighted. With the U.S. turning 250 years old this July 4, we expect a solid framework will be established that keeps North America at the forefront of global economic growth.  

The U.S. has come a long way, and trade has shifted over time from economic sustainability to economic durability. This durability has been built on shared trade rules globally, but especially within North America. There is too much at stake with an estimated $2 trillion in trade and millions of trade-related jobs. We believe investors could potentially benefit on the other side of the outcome. 

Stay the course through uncertainty 

While the USMCA renegotiations have the potential to temporarily disrupt markets, it’s important for investors to take a long view. Your Ameriprise financial advisor is here to help you navigate uncertainty in the broader macroeconomic environment and keep you on track toward your long-term financial goals.