Societe Generale has issued a cautionary assessment on North American trade stability, identifying Canada as a market with elevated investment risk while noting that Mexico is actively seeking alignment to secure certainty under the United States-Mexico-Canada Agreement (USMCA). The bank’s research underscores growing investor unease over the durability of the trade framework that replaced NAFTA in 2020 and governs more than $1.5 trillion in annual trilateral trade.
The warning on Canada centers on the country’s heavy reliance on U.S. demand—roughly 75% of Canadian exports go to the United States—as well as regulatory uncertainties in the energy sector and potential shifts in U.S. policy that could undermine USMCA provisions. Societe Generale points to ongoing disputes over rules of origin and dispute resolution mechanisms as sources of instability. The report comes ahead of the 2026 USMCA review, a joint mechanism that could lead to renegotiation or adjustment of terms, and aligns with IMF warnings that trade policy uncertainty is a key risk to global growth.
For Mexico, Societe Generale says the priority is alignment with North American partners through established channels to avoid supply chain disruptions and support foreign direct investment. The analysis highlights that predictable trade relations are essential for corporate decisions on manufacturing locations, supply chain logistics, and capital allocation. A cooperative approach could bolster the Mexican peso and improve the outlook for the industrial sector, while continued ambiguity could increase market volatility and reduce growth prospects.
The assessments reflect broader concerns about shifting geopolitical alliances and global supply chain pressures. For Canadian businesses, the warning reinforces the need for diversification strategies and contingency planning, especially for companies dependent on cross-border supply chains that may face higher financing costs or delayed investments. Policymakers in Ottawa and Mexico City are likely to face increased pressure to strengthen domestic economic resilience and demonstrate progress on trade stability ahead of the 2026 review.
While Canada’s economic fundamentals remain strong, Societe Generale’s analysis signals that trade policy stability is becoming a more important factor in investment decisions across North America. Investors and policymakers will be watching for concrete steps and agreements that either reassure markets or amplify existing risks.
