USMCA – Potl. Headline Risks into Negotiations, Expect All Parties to "Kick the Can"; May Inv

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USMCA – Potl. Headline Risks into Negotiations, Expect All Parties to "Kick the Can"; May Inv

Wolfe Research Auto Daily

USMCA – Potl. Headline Risks into Negotiations, Expect June 4, 2026

All Parties to "Kick the Can"; May Inv

The Wolfe Byte

In today's Wolfe Autos Daily: 1) With USMCA scheduled for renegotiation this summer, we're reviewing our trade

playbook ahead of potl. headline risks, 2) Modest US inventory destocking in May.

USMCA Update – Potential for Headline risks into this Summer’s negotiations, but expect all parties to largely kick

the can down the road

Trade tensions have fallen out of focus for Autos investors, as broader macro optimism and burgeoning non-Auto

opportunities take center stage. But we do see the theme re-emerging over the next several weeks, as the first annual

review of the USMCA trade agreement kicks-off. The 3 nations are formally expected to meet on July 1, with US-MX

representatives already in consultation. Against that backdrop, we’ve recently caught up with a few of our industry

contacts to get a sense of where the 3 sides stand, and what to expect over the coming weeks/months.

Kicking the can down the road appears to be the most likely outcome. If the countries agree to extend USMCA in its

current form this year, the agreement will be extended 16 years, through 2042. But that won’t happen. As discussed

below, the US is pushing for significant changes, with Canada & Mexico likely to push back. If the 3 sides don’t reach

a deal, it automatically triggers annual reviews through 2032.

US taking an aggressive opening position, including: a) raising the NA content requirement to 82%, up from 75% under

the existing deal; b) CA & MX-made parts & finished vehicles to have 50% US content to qualify for USMCA. Recall