As the U.S.-Canada trade deal moves toward saber-rattling, Kearney’s Drew DeLong, head of corporate statecraft at Kearney Foresight, an arm of global management consultancy Kearney, sees that the targets are moving apace and in different directions, both in terms of strategy and specific content of imported and exported goods.

DeLong provides the following insight:

USMCA qualification is increasingly critical, but no longer sufficient, for preferential U.S. market access. Economic-security considerations such as non-market economy (NME) content, U.S. content, investment, and tariff alignment are increasingly shaping the cost of duty-free access into the U.S. market.

That said, the U.S. willingness to apply new tariffs regardless of USMCA status highlights the limits of this model that operating strategies must consider.

Canada and Mexico are testing different economic strategies with Washington. Mexico appears to be leaning toward deeper U.S. alignment for greater access certainty, while Canada is testing whether greater strategic autonomy is worth increased trade friction. The two divergent trade negotiation strategies will be studied for decades in trade policy courses, and time will tell the tale of who benefits the most.

The biggest risk to USMCA may not be that it disappears, but that one North American rulebook becomes two. Companies may ultimately face different qualification, sourcing, and investment requirements across the Canada and Mexico corridors. For global multinationals with deeply integrated supply chains across all three countries, this divergent model could introduce stark complexity.

The world is watching how Canada’s walk-away tests the limits of Washington’s economic security priorities. Trading partners may accept meaningful economic costs when the perceived sovereignty cost of U.S. alignment becomes too high.

Top trading partners like China, Europe, Brazil, and broader will be watching closely to see how these negotiations play out and what it means for their respective negotiation strategies as the U.S. reintroduces Section 301 tariff authorities to recreate its previous International Emergency Economic Powers Act (IEEPA) tariff levels (or higher).

The next trade policy frontier may likely be about what is inside a product, not just where it was assembled. NME-content restrictions and transship scrutiny could force companies to trace foreign inputs deep into the bill of materials to preserve preferential access. This scrutiny, paired with the recent White House report on transshipment and its new AI Transshipment tool, sets the stage for a new wave of requirements that businesses must carefully watch and proactively plan for.

CEOs are now searching for the right balance of optionality vs. efficiency. As the White House trade agenda crystallizes around more legally solidified Section 301 tariffs to recreate IEEPA-esque tariff levels, Section 232s on multiple sectoral categories, and preferential treatment for select trade corridors (CAFTA, USMCA, and PTAAP Lists), the global trade chessboard now has more pieces than operators can meaningfully plan around. 

However, this weekend’s sudden negotiation breakdown highlights the importance of optionality within operating strategies in this environment. As we continue to see more volatility and uncertainty introduced on a plethora of fronts, the premium on a business to adapt without disruption will increase starkly.