Morgan Stanley's 3 Scenarios For The Next Chapter Of North American Trade

By Ariana Salvatore, Fixed Income Research at Morgan Stanley

Amid the cacophony of tariff announcements and rolling deadlines, investors and businesses will soon have to shift their focus to another trade policy catalyst with wide-ranging repercussions: a review of the USMCA (US-Mexico-Canada Agreement) gets underway in 2026.

At stake are key trade policy variables (e.g., autos, critical minerals, and more) that are significant for the outlook of the Mexican and Canadian economies. Calibrating tariff policy on certain key sectors could build a positive narrative for the Mexican economy, while protracted tariff risks could be a drag on the outlook, which is critically dependent on the trajectory of US-Mexico trade.