Societe Generale’s Dev Ashish anticipates that the ongoing United States-Mexico-Canada Agreement (USMCA) negotiations will be extended rather than resulting in the agreement's termination. This outlook is based on statements from both Mexican and US officials, who have downplayed the presence of irreconcilable differences in the talks [1]. The annual review mechanism embedded in the USMCA is highlighted as a tool that allows Washington to maintain leverage in negotiations, particularly to seek concessions related to manufacturing localization, supply-chain security, and market access [1].
USTR Jamieson Greer has justified the US position by referencing unresolved concerns about trade imbalances, rules of origin, and the influence of third-country—especially Chinese—content within North American supply chains [1]. These issues are expected to generate recurring headlines and keep the negotiation process in the market spotlight for an extended period [1].
Despite the potential for ongoing negotiation-related uncertainty, Societe Generale points to several factors that support the likelihood of an eventual compromise. These include deep regional supply-chain integration, strong business lobbying efforts, bipartisan support within the US Congress, and the strategic imperative to compete with China [1].
CONCLUSION
The market should expect recurring headlines and a drawn-out negotiation process regarding the USMCA, but not a rupture of the agreement. Societe Generale sees an eventual compromise as likely, supported by strong economic and political incentives on all sides.