The continental trade agreement that governs Canada-US commerce is in active renegotiation. This week, the process moved from talks to formal trigger. Here is what cross-border clients need to understand.

If you want this reflected in how a portfolio is built, see our cross-border investment management service.

The Canada-United States-Mexico Agreement, CUSMA, governs more than two trillion dollars in annual trade between Canada and the United States. It sets the rules for how goods move, how services are priced, how supply chains are structured, and what preferential treatment Canadian and American businesses receive when they operate across the border.

As of June 1, that framework is in formal renegotiation. USTR Jamieson Greer has signalled to Congress that the US intends to formally trigger the CUSMA review process, the mechanism built into the original 2020 agreement for exactly this kind of renegotiation. This is not an informal dispute. It is a structured legal and diplomatic process with a defined timeline.

In the same week: PM Carney traveled to New York to pitch Canada as an investment hub, highlighting close Canada-US ties in autos, metals, and minerals. Deputy PM LeBlanc is in Washington this week for direct trade talks. China’s Foreign Minister Yi met with Carney and Minister Anand in Ottawa. And a senior US trade official noted publicly that Canada is in a “different spot” when it comes to Trump tariffs, signalling that Canada’s negotiating position is more cooperative than other trading relationships.

WHY THIS MATTERS

CUSMA is not abstract policy. It is the legal framework that determines whether your cross-border business income is taxed preferentially or at standard rates, whether goods you manufacture on one side of the border can be sold on the other without additional tariffs, and whether your investment returns from cross-border business interests are protected by treaty.

The formal trigger of the CUSMA review process raises the stakes. The US content priority from USTR Greer is a direct signal to cross-border business owners and investors in manufacturing, auto supply chains, and integrated production. If renegotiated CUSMA rules require higher US content percentages to qualify for preferential treatment, businesses that currently source inputs from Canada or Mexico face a structural decision about their supply chains.

The formal review also creates a defined planning window. CUSMA renegotiation has a timeline. The clients who understand their current exposure now, while terms are still being set, have more options than those who wait for the new agreement to take effect.

The “different spot” comment from the US trade czar is still notable. It suggests that the US views Canada as a more cooperative negotiating partner than other trading relationships, which creates room for Canada to secure terms that are less disruptive than the worst-case outcome. But “cooperative” does not mean “unchanged.” Changes are coming. The question is their scope.

WHAT IT MEANS FOR YOUR PORTFOLIO

If You Have Business Income on Both Sides of the Border

CUSMA renegotiation affects the treaty protections that cross-border business owners rely on for tax treatment of income earned in each jurisdiction. Changes to the agreement can alter withholding tax rates, income attribution rules, and the definition of permanent establishment. If your income straddles the Canada-US border, the formal trigger of the CUSMA review process is a reason to review your corporate and trust structures with qualified cross-border advisors now, not when new rules are finalized.

Canadian Manufacturing and Auto Supply Chain Exposure

If you hold Canadian equities in manufacturing, automotive, or integrated industrial sectors, USTR Greer’s US content push is a direct risk factor. Companies that rely on cross-border supply chains to meet current CUSMA rules of origin may need to restructure if new content thresholds are set. Monitor Q2 and Q3 earnings commentary from Canadian industrial companies for early guidance on how management teams are responding to the formal review.

The Carney Investment Pitch and Capital Formation

Carney’s New York trip is not just diplomatic. It is a direct effort to keep US capital flowing into Canada at a moment of elevated trade uncertainty. For cross-border clients considering Canadian real estate, infrastructure, or private equity investments, the tone from New York matters. LeBlanc’s Washington visit this week will be an important early indicator of how the formal negotiation is proceeding.

THE BOTTOM LINE

CUSMA renegotiation is no longer a background risk. The formal review process has been triggered. The process has a timeline. And Canada’s negotiating posture, while cooperative, does not guarantee unchanged terms.

The clients who will navigate CUSMA changes best are the ones who understand their current exposure now. Business structure reviews, supply chain assessments, and cross-border income planning are all worth accelerating in this window, before new rules are locked in.

Frankly, the most expensive outcome is not a difficult new CUSMA framework. It is being caught by rule changes you did not see coming. The planning window is open. Use it.

FREQUENTLY ASKED QUESTIONS

Q: What is CUSMA and how does it differ from NAFTA?

CUSMA, the Canada-United States-Mexico Agreement, replaced NAFTA in 2020. It governs trade rules including rules of origin, intellectual property protections, financial services provisions, and dispute resolution mechanisms. It is substantively similar to NAFTA in many areas but includes updated provisions for digital trade, labour standards, and agricultural market access. The formal review process now being triggered was built into the original 2020 agreement as a mandatory review mechanism.

Q: What does it mean that the US formally triggered the CUSMA review?

The CUSMA review trigger is a formal diplomatic and legal step, not just a negotiating posture. It sets a defined timeline for renegotiation and signals that the US intends to seek material changes to the agreement, particularly around US content requirements and external tariff alignment. It does not mean the agreement is being terminated, but it does mean the current terms are no longer guaranteed. Cross-border business owners and investors should treat this as a planning signal.

Q: How does CUSMA affect cross-border business owners?

CUSMA establishes the rules for how income earned by Canadians doing business in the US, or Americans doing business in Canada, is taxed and attributed. It sets the framework for withholding taxes, permanent establishment rules, and the treaty protections that reduce the risk of double taxation. Changes to CUSMA can alter those rules, which is why cross-border business owners should be reviewing their current structures while negotiations are ongoing.

Q: What is the US content priority and why does it matter?

USTR Greer has signalled that the US will push for rules requiring a higher percentage of US-origin content in goods that receive CUSMA preferential treatment. This is a concern for manufacturers with integrated Canada-US supply chains, because it could require them to either source more US inputs or lose preferential tariff treatment. The automotive sector, where Canadian and US production is deeply integrated, is particularly exposed.

Q: What should I do with my cross-border plan while CUSMA talks are ongoing?

Review your current corporate structure, income attribution, and treaty eligibility with a qualified cross-border advisor. Understand where CUSMA’s rules of origin and treaty provisions currently benefit you. If new content requirements or rule changes would affect your business, early awareness gives you time to adapt structures before new rules take effect. The formal review timeline creates urgency. This is a conversation worth having now.

SOURCES

• Raymond James: The Open, May 27, 2026 (subscription newsletter, available to Raymond James clients)
• Raymond James: The Open, May 29, 2026 (subscription newsletter, available to Raymond James clients)
• CUSMA Renewal Media Tracker — https://www.caf-fcv.ca/cusma-renewal-tracker/
• RBC: Trade Zone — A CUSMA Signal, Amid the Noise — https://www.rbc.com/en/thought-leadership/the-trade-zone/a-cusma-signal-amid-the-noise/
• CBC News: CUSMA is up for review in 2026, and here’s what Trump might want — https://www.cbc.ca/news/politics/cusma-review-2026-what-trump-wants-9.7026216
• Government of Canada: Canada-United States-Mexico Agreement — https://www.canada.ca/en/global-affairs/news/2018/10/cusma.html

DISCLAIMER

This blog post is for informational and educational purposes only and does not constitute financial, tax, or legal advice. The information contained herein is based on sources believed to be reliable but is not guaranteed as to accuracy or completeness. Past performance is not indicative of future results. All investments involve risk, including the possible loss of principal. Cross-border tax and financial planning involves complex rules that vary by individual circumstance and jurisdiction. Consult a qualified financial advisor, tax professional, or legal counsel before making any investment or financial planning decisions. Sartorial Wealth Management Inc. is registered in Canada. US-based services may be subject to additional regulatory requirements.