President Donald Trump is considering ending the US-Mexico-Canada Agreement (USMCA), a trade deal he once hailed as the “fairest, most balanced, and beneficial trade agreement we have ever signed.” The agreement, which replaced the North American Free Trade Agreement, facilitates roughly $2 trillion in annual trade among the three neighboring countries.

Trade Implications

The USMCA’s duty-free provisions are crucial for supply chains, particularly in the auto industry, where parts cross the US, Mexican, and Canadian borders multiple times before a finished vehicle is assembled. Senior administration officials have signaled a willingness to continue trade talks on a bilateral basis to address specific issues, such as reducing the trade deficit the United States runs with Mexico and Canada.

Withdrawing from the deal altogether is an option, but it’s complicated. The earliest it could happen is six months from now, per the terms of the agreement. Additionally, there’s a question about whether Trump would have the authority to do so without congressional approval. The Senate Finance Committee has stated that “The United States cannot withdraw from a congressionally approved trade agreement without the consent of Congress.”

Economic Impact

Economists and trade experts are not expecting a withdrawal, given the potential consequences for the United States. Abandoning the USMCA could strain US relations with two of America’s top trading partners, leading to chaos, stock market gyrations, higher prices, and shortages as supply chains adjust to higher tariffs.

Original reporting: El Paso News (HLL/CB) — read the source article.