Societe Generale’s Dev Ashish expects a drawn-out USMCA negotiation process rather than agreement expiry, highlighting comments from Mexican and US officials that downplay irreconcilable differences. He argues annual reviews give Washington leverage to seek concessions on localization and security, implying recurring headlines but an eventual compromise supported by deep supply-chain integration and bipartisan US backing.

Annual reviews entrench negotiation leverage

"Our base case remains a prolonged negotiation process rather than a rupture of the agreement."

"Meanwhile, USTR Jamieson Greer has justified the decision by citing unresolved concerns related to trade imbalances, rules of origin, and the role of third-country—particularly Chinese—content within North American supply chains."

"The annual-review framework provides Washington with a mechanism to maintain negotiating leverage and pursue concessions on manufacturing localization, supply-chain security, and market access."

"Consequently, recurring negotiation headlines are likely to remain a feature of the market backdrop for some time."

"Deep regional supply-chain integration, strong business lobbying efforts, bipartisan support within the US Congress, and the strategic imperative to compete with China all support the case for an eventual compromise."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)