American States Push to Preserve CUSMA Even as Trump Refuses to Renew It in Current Form

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North America’s trade relationship has entered an unusual period in which Washington and several American states appear to be looking at the same agreement through very different economic lenses. The Trump administration declined to renew the Canada-United States-Mexico Agreement, known as USMCA in the United States, in its current form on July 1, arguing that significant problems must be corrected first.

Yet governors, lawmakers, manufacturers, farmers and business groups across trade-dependent states are pushing for something considerably less disruptive: preserve the continental framework, strengthen what needs fixing and restore predictability. Their concern is increasingly practical rather than ideological. Factories, farms and distributors have spent years building operations around a North American market. The agreement remains in force, but the battle over what replaces—or preserves—the current version is becoming increasingly local.

The Deal Was Not Renewed, but It Did Not Disappear

The distinction between refusing to renew CUSMA and terminating it is critical. During the mandatory joint review on July 1, 2026, the United States formally declined to extend the existing agreement for another 16-year term. U.S. Trade Representative Jamieson Greer said Washington would instead continue negotiating with Canada and Mexico over what the administration considers shortcomings in the pact. Canada and Mexico supported an extension, leaving the three governments without the unanimous agreement required for renewal.

That decision did not switch off North American free trade overnight. CUSMA remains in force through 2036 under its existing review-and-extension provisions. Because the three countries did not agree to extend it, they now move into annual joint reviews. An extension can still happen before 2036 if all three governments subsequently agree. Canada has emphasized that point, while Mexico has similarly described the current situation as a continuing agreement rather than a collapse. The practical effect is a decade-long runway—but potentially a decade filled with recurring negotiations and uncertainty if no broader deal emerges.

States See a Different Balance Sheet Than Washington

The Trump administration evaluates CUSMA largely through national trade deficits, domestic manufacturing targets and its broader effort to restructure international commerce. State governments often have a more immediate calculation. A governor looking at a major plant, farm sector or export corridor has to consider whether tariffs or prolonged uncertainty could interrupt investment, raise operating costs or weaken a local employer that depends on Canadian or Mexican customers.

That has produced unusually visible state-level advocacy. Michigan Governor Gretchen Whitmer has repeatedly argued that North American cooperation is essential to American auto competitiveness. Arizona Governor Katie Hobbs led a delegation to Washington to advocate for stability during the review. Virginia Governor Abigail Spanberger later urged the administration to restore predictable market access and strengthen the agreement as the U.S.-Canada dispute intensified. These officials are not necessarily arguing that every CUSMA provision should remain untouched. The recurring message is narrower: improvement is different from dismantling an integrated commercial system that businesses have already spent years adapting to.

Michigan’s Auto Economy Makes the Argument in Real Time

Few states illustrate the stakes as clearly as Michigan. Canada was Michigan’s largest foreign market in 2025, receiving roughly $23.2 billion worth of goods, or about 39% of the state’s merchandise exports. Mexico ranked second at approximately $16.6 billion. For a state whose economic identity is deeply intertwined with vehicle manufacturing, those numbers turn an international trade negotiation into a factory-floor issue.

Automotive production also demonstrates why a tariff at the border does not necessarily affect only a foreign producer. Parts and materials can move between American, Canadian and Mexican facilities during different stages of manufacturing before a finished vehicle reaches a dealership. Michigan officials have repeatedly emphasized that highly integrated reality. The opening of the Gordie Howe International Bridge between Detroit and Windsor in July offered an almost symbolic contrast to the political dispute: even as Washington questioned the existing trading relationship, billions of dollars had been invested in infrastructure designed to make cross-border commerce more efficient. Michigan’s argument is therefore less about defending Canada than protecting an industrial ecosystem centred heavily in the United States itself.

Arizona Wants Repair, Not Replacement

Arizona provides a different version of the same argument. Governor Katie Hobbs commissioned the Seidman Research Institute at Arizona State University to examine the state’s interests ahead of the 2026 CUSMA review. The resulting study found broad business support for retaining and improving the trilateral agreement rather than replacing it with tariffs or a collection of separate bilateral arrangements. More than 85% of participants expected Arizona to experience negative consequences if CUSMA were not renewed.

The exposure is significant. Arizona exported about $14.6 billion in goods to Mexico in 2025, making Mexico its largest export market, while Canada remained another major destination. Arizona’s trade interests also stretch across sectors including advanced manufacturing, agriculture, mining, transportation and logistics. That is why Hobbs took the state’s case directly to Washington before the July review. Arizona businesses were not arguing that CUSMA was flawless; the state study identified areas where standards, border infrastructure and supply-chain rules could be improved. The preference, however, was continuity with targeted reform—a model increasingly heard from American regions that benefit from continental production networks.

Virginia and New England Show Why Canada Matters Beyond the Border

The pressure is not limited to the automotive Midwest or the Southwest. Virginia Governor Abigail Spanberger entered the debate as the U.S.-Canada tariff confrontation worsened, arguing that trade instability was causing real economic damage. Canada was Virginia’s largest export destination in 2025, purchasing approximately $2.9 billion in goods, or about 15% of the Commonwealth’s total merchandise exports. Spanberger specifically called on U.S. officials to prioritize predictable market access and strengthening CUSMA.

The same concern appears across New England. The New England-Canada Business Council formally backed renewal, noting that Canada ranks as either the first- or second-largest export market for each of the six New England states and is the leading source of foreign imports for all six. Another regional business group estimated that New England exported nearly $8.8 billion in goods to Canada in 2025. The industries involved range from manufacturing and technology to agriculture, forestry and services. That helps explain why trade disputes that can look abstract from Washington quickly become questions about sales, inventories, contracts and employment in local communities.

Farm-State Pressure Is Increasingly Bipartisan

Agriculture has created one of the clearest bipartisan constituencies for preserving predictable North American trade. Ahead of the July review, a large group of Republican and Democratic senators urged U.S. Trade Representative Greer to maintain certainty and improve market access for American farmers and ranchers. The coalition stretched from Montana and Minnesota to Arkansas, Georgia, Iowa, Texas, North Dakota, Nebraska, Michigan, Ohio and numerous other states.

The lawmakers pointed to the scale of American agriculture’s dependence on foreign markets. U.S. agricultural exports were valued at about $176 billion in 2024, with Canada and Mexico serving as crucial destinations for commodities and food products. Farm organizations representing soybeans, corn and wheat also supported maintaining the agreement while improving enforcement. That position reveals an important divide in the broader debate. Many farm-state politicians support tougher action when Canada or Mexico is accused of restricting American products, but certainty itself has economic value. A wheat grower or equipment dealer making investment decisions several seasons ahead may favour stronger enforcement without wanting the underlying market-access framework repeatedly placed in doubt.

Why Trump Will Not Sign Off on the Status Quo

The administration’s resistance is based on a substantially different diagnosis. USTR’s 2026 trade agenda pointed to a U.S. goods deficit of roughly $46 billion with Canada and $197 billion with Mexico in 2025, arguing that the imbalances have increased since CUSMA entered into force. Washington has also criticized Canada over dairy market access and digital policies and has raised complaints about Mexican energy policies, investment conditions and labour enforcement.

The administration additionally wants stronger rules of origin, tighter protections against transshipment and measures designed to prevent companies from non-market economies from using Canada or Mexico as a back door into the American market. Autos are central to that agenda because Washington wants a greater share of vehicle content produced specifically in the United States rather than merely somewhere in North America. Trump has gone further rhetorically, saying in July that he was not particularly interested in updating the agreement and arguing that Canada and Mexico need the U.S. market more than America needs theirs. From the administration’s perspective, refusing renewal creates leverage to demand structural concessions rather than simply approving another 16 years.

Industry Is Turning Local Exposure Into Political Leverage

Businesses caught between those positions are increasingly trying to move the discussion from Washington back into state capitals. In September, Associated Equipment Distributors sent letters to governors in states with substantial exposure to Canadian trade, urging them to press for renewed negotiations and a predictable, tariff-free commercial relationship. The organization warned that machinery, industrial components and replacement parts can cross the border several times during production and distribution, making tariffs capable of multiplying costs through a supply chain.

Manufacturers have delivered a similar message while still acknowledging opportunities to improve CUSMA. The National Association of Manufacturers reported that 15 of 18 U.S. manufacturing sectors had increased exports to Canada and Mexico since the agreement was ratified. Its 2026 outlook research also found that many manufacturers rely on Canada, Mexico or both for critical portions of their supply chains. This is not necessarily a campaign for an untouched agreement. Manufacturers have advocated modernization and stronger enforcement as well. The distinction is that industry groups generally view the North American framework as an asset to upgrade rather than an economic relationship to rebuild from scratch.

The 2027 Review Is Already the Next Battleground

The next stage has already begun. On October 2, USTR opened a public consultation process ahead of the 2027 joint review, inviting comments on how the agreement is operating and announcing plans for a public hearing. Written submissions and requests to participate in the hearing are due January 12, 2027. That gives governors, state industries, labour groups, farmers and corporations another formal opportunity to influence the American negotiating position.

Canada continues to support renewal, while Mexico has also made clear that it wants the agreement extended. The United States therefore remains the key holdout, although its refusal in July does not prevent an agreement later. All three governments can still jointly extend CUSMA for another 16 years before the 2036 expiration date. That makes the present fight less a funeral for North American free trade than a struggle over what the next version will contain. American states will not make the final decision, but the more tariffs and uncertainty affect local investment, exports and employment, the harder it may become for Washington to negotiate without hearing from the economies operating beneath it.

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