North Carolina, which exported a record $43.8 billion in goods in 2025 with Canada as its largest market, faces an uncertain future as the first formal review of the USMCA begins July 1. This significant trade agreement, governing commerce across North America, will undergo scrutiny by officials from the United States, Canada, and Mexico.
The USMCA underpins billions in trade and supports hundreds of thousands of U.S. jobs, but the first formal review's potential impact on these vital economic ties remains largely unknown. The review process, which includes a USMCA review countdown to a 2026 deadline for initial assessments, introduces a period of heightened market sensitivity.
Companies deeply integrated into North American supply chains should prepare for potential shifts in trade policy and market access as the review unfolds. This inaugural review marks a critical juncture for the agreement, potentially reshaping the economic landscape for states and industries deeply integrated into North American trade.
The Vast Economic Stakes for U.S. States
North Carolina's economy relies heavily on its North American partners. The state imported roughly $17 billion in goods from Mexico and over $8 billion from Canada in 2024, according to The North State Journal. This two-way trade supports as many as 142,000 jobs across North Carolina.
The sheer scale of North Carolina's two-way trade with Canada and Mexico, totaling over $60 billion annually, means the USMCA review is not just an export issue but a potential inflationary trigger for goods imported into the state. North Carolina's economy, with Canada as its largest export market and 142,000 jobs tied to North American trade, is uniquely vulnerable to any unfavorable outcomes from the USMCA review, making it a bellwether for broader state-level economic impacts.
Critical Impact on Key U.S. Industries
The American textile sector exhibits an extreme reliance on its North American trade partners. This industry ships $11.6 billion, or 53 percent, of its total global textile exports to Mexico and Canada, according to WWD. Overwhelming dependence highlights a significant supply chain risk.
Companies within the U.S. textile sector, which funnels 53% of its global exports to Mexico and Canada, are operating with an unacknowledged level of supply chain risk. Even minor adjustments to USMCA terms could decimate their primary international markets. The textile sector's deep reliance on USMCA trade illustrates how changes to the agreement could ripple through specific industries, affecting supply chains and competitiveness across the continent.
Understanding the USMCA Review Process
U.S. Canadian, and Mexican officials are scheduled to meet for the review, with negotiations set to begin July 1, according to the National Association of Manufacturers and mexicobusiness. However, no source provides specific details on the agenda or potential points of contention. This lack of publicly available information on the review's scope amplifies uncertainty for businesses.
While the specific mechanisms of this first formal review are still emerging, its structure allows for comprehensive evaluation and potential renegotiation of key provisions. The review process serves as a scheduled opportunity for the three nations to assess the agreement's effectiveness and address any challenges that have arisen since its implementation.
Potential Outcomes and Future Implications
The USMCA review could lead to several different outcomes for North American trade relations. One possibility involves reinforcing existing trade ties, where the parties affirm the agreement's core tenets and make only minor, technical adjustments. This scenario would offer stability for businesses.
Alternatively, the review could lead to targeted adjustments in specific sectors or provisions. Such changes might address new economic realities or resolve ongoing trade disputes. In a more contentious scenario, the review could trigger significant disputes that reshape regional commerce, potentially leading to new barriers or increased costs for businesses and consumers alike. The review could either reinforce existing trade ties, lead to targeted adjustments, or, in a more contentious scenario, trigger significant disputes that reshape regional commerce.
Your Questions Answered
What happens if the USMCA is not reviewed?
The USMCA has a 16-year term, featuring a built-in six-year review. If the parties fail to agree on extending the agreement after this review, it would then expire in 10 years. This mechanism ensures regular evaluation while providing a long-term framework for trade.
What are the key provisions of the USMCA review?
The review mechanism itself is a central provision, mandating a joint assessment every six years. This allows member countries to evaluate the agreement's operational effectiveness and collaboratively decide on its continued duration. The process serves to maintain the relevance and fairness of the trade relationship.
Who is involved in the USMCA review process?
U.S. Canadian, and Mexican government officials lead the formal review discussions. Beyond these principal negotiators, various industry stakeholders, business associations, and advocacy groups also participate by providing critical input and recommendations to their respective governments throughout the process. Marsh, for instance, has warned businesses to prepare for potential trade friction.
Companies reliant on North American supply chains, particularly within the U.S. textile sector, face a critical six-month period following the July 1 USMCA review, as potential adjustments could reshape billions in trade by the end of 2026.
