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Economist expects drawn out USMCA negotiations

The North America economist for Coface, a global leader in trade credit insurance and risk management, says he doesn’t expect a quick solution to the USMCA renewal process.  

Marcos Carias tells Brownfield the tri-lateral trade agreement is set for renewal on July 1^st, however…

“Talks have been faster with Mexico than with Canada, but even with Mexico, we’ve got a talk scheduled for the 20th of July.”  He says, “It’s not going to be a clean resolution, and we expect negotiations to extend into later this year and probably even 2027.”

He says supply chains across numerous industries are intertwined between the countries, so recent threats by the Trump administration to pull out of the deal are likely just that.

“Though they like to gamble, they’re not, let’s say, suicidal when it comes to the economy.”  He says, “They are sensitive and aware of the risks.”

For example, Mexico supplies 64% of America’s vegetables and Canada supplies nearly all of American farmer’s potash needs.  Carias says current projections are not calling for much impact on food inflation or other prices as negotiations continue, but…

“The only thing that would materially change that is if somebody triggers the we’re leaving in six months clause.”  He says, “The cancellation, that’s kind of like a nuclear option.”

With billions in trade on the line, Carias says the economies of all three countries are likely to face continued uncertainty until a clear path forward on USMCA is reached.

AUDIO: Marcos Carias – Coface