Insurance and risk advisory firm Marsh has warned that businesses should treat increased policy friction as the new baseline as the formal review of the North American trade agreement gets underway, outlining three scenarios that each carry distinct implications for tariffs, supply chains and cross-border operations.
The report, published ahead of the July 1, 2026 review trigger date, maps three plausible outcomes: a trilateral extension in which the US, Canada and Mexico agree on revisions and concessions; continuation of the existing framework accompanied by bilateral or sector-specific side agreements; or termination by the US and a shift toward separate bilateral deals. Marsh says that under any of these paths, operational complexity facing multinational firms will increase.
The review is the first of its kind under the USMCA, which replaced NAFTA in July 2020. Article 34.7 of the agreement requires the three parties to conduct a formal joint review on the sixth anniversary of entry into force, with the agreement set to terminate in 2036 unless all three parties confirm in writing that they wish to extend it for another 16 years. July 1 is not a deadline for completing negotiations but a trigger date. If no agreement is reached, the USMCA enters a cycle of annual reviews that can run for up to a decade before the agreement either extends or expires.
As of mid-June 2026, Canada and the US had held zero formal trade agreement review meetings, meaning any trilateral renewal would require significant diplomatic momentum in a compressed timeframe, with early engagement having been predominantly between the US and Mexico.
Marsh's most stable scenario, a negotiated trilateral extension, would offer the greatest continuity but would require substantive concessions from Canada and Mexico, with key sectors including automobile, steel, aluminum and critical minerals potentially subject to new conditionality. Analysis from the Center for Strategic and International Studies suggests an agreement tightening rules of origin, strengthening enforcement and addressing China-related supply chain concerns without dismantling the trilateral framework remains within reach, and would underpin close to $2 trillion in annual North American trade.
The second scenario, preservation of the existing agreement text alongside bilateral or sector-specific side deals, would increase transaction complexity as governments negotiate targeted arrangements on automotive content, energy and investment screening. The third scenario, termination, poses the greatest disruption risk. Marsh notes that any new bilateral arrangements would likely be made at the executive rather than legislative level, making them more susceptible to rapid and persistent policy change over time.
CSIS describes the base case as a protracted extension, with negotiations stretching into late 2026 or beyond, concentrated in autos, energy, China-related disciplines and enforcement architecture.
For insurance and risk professionals, the review's uncertainty carries direct practical consequences. Trade credit insurance, political risk coverage, supply chain interruption policies and directors and officers liability are all lines that can be affected when policy friction rises and counterparty risk becomes harder to model. The automotive sector carries the highest operational risk, with rules of origin, labor enforcement and tariff pressure likely to drive more frequent origin audits across manufacturers and suppliers. Insurers and brokers advising clients in manufacturing, energy, agriculture and critical minerals will face growing demand for scenario analysis and contract review as negotiations develop.
The timing is notable for the commercial insurance market more broadly. Sustained trade uncertainty tends to compress investment decisions, extend contract timelines and push risk managers toward scenario planning rather than fixed placements — all of which affects how coverage is structured, priced and renewed. Clients with cross-border supply chains concentrated in North America face the most immediate exposure, but the knock-on effects for global specialty lines could extend well beyond the continent depending on which scenario prevails.
Christopher Coppock, head of geopolitical and economic risk analysis at Marsh, said: "Business leaders should assume greater policy friction is the new baseline as the trade agreement review unfolds, here in North America and around the world, and build resilience now. That means stress-testing supply chains against tariff and non-tariff shocks, clarifying contractual risk allocation with suppliers and customers, understanding ownership structures, and ensuring trade compliance teams are equipped to respond quickly to shifting rules. The earlier organizations act, the more optionality they will preserve."
