The Canadian dollar is starting to feel the effects of long-term uncertainty. It will get worse.

...”Since the start of June, the currency has weakened 2.9%, which would be its steepest monthly decline since October 2024, as Canadian bond yields fell further below U.S. yields.”… {source}

Now, this is where you really need to pay attention to details.  Remember, the U.K and EU have a vested interest in protecting Canada from economic collapse.

President Trump doesn’t want immediate collapse either -because Xi will move in fast- but Trump is not going to provide the same financial and economic lifelines that the other four-eyes will trigger.

Reuters is reporting that tomorrow the U.S. will formally declare a “non-extension” of the USMCA trade agreement {ARTICLE} and that triggers a 10-year period to decoupling.  It is very important to understand there is a difference between announcing a “non-extension” and announcing a “withdrawal“.  The Canadians are completely confused about what is about to happen.

In a non-extension announcement, the USA is saying they do not want to extend or renew the terms of the agreement beyond the current trade agreement terms.  Yes, this is a 10-year exit.  However, that’s not the part that matters.  Announcing a decision to exit the USMCA (CUSMA), a full withdrawal from the trilateral deal, triggers a six-month countdown to exit.

The deadline to announce the decision to extend is tomorrow, July 1st.  There is no deadline on the timeline to announce an exit or withdrawal from the USMCA. That announcement can happen at any time.

Put simply, announcing a non-renewal is a 10-year exit.  Announcing a withdrawal is a 6-month exit.  The announcement to withdraw can come at any time after the statement of non-renewal.

You can see the confusion in this article:

WASHINGTON, June 30 (Reuters) – U.S. President Donald Trump’s administration is expected to formally declare on Wednesday that it will not extend the U.S.-Mexico-Canada Agreement on trade, starting a decade-long clock to wind down the 32-year-old North American free trade zone as the three countries haggle over proposed changes.

That declaration will kick off a six-year review session, part of a “sunset clause” negotiated by President Donald Trump’s first administration. However, it will do little to alter contentious negotiations over the pact’s future, including sweeping demands to boost U.S. and regional content in North American automotive production and trade protections to block Chinese goods from benefiting from USMCA. (read more)

The most likely scenario is Trump/Greer first say the USA is not renewing (not extending).  Then, at a later date determined by them (in my opinion it will be after the U.S-Mexico agreement is finished), Trump and Greer will then announce the withdrawal, which will trigger the 6-month countdown to exit.

There is no rush to announce the withdrawal; the only immediate action is to announce a USMCA renewal is not happening.

What this scenario does is put maximum pressure on Canada.  As soon as President Trump says the USA will not extend the agreement, all investment into Canada becomes extremely tenuous.  The Canadian dollar will weaken further; a slow contraction will begin.  However, Canada will still be oblivious to what comes next because their media will tell them they have a decade to work things out. They don’t.

At a time determined by President Trump and USTR Jamieson Greer, they will announce a decision to exit the USMCA which then triggers a 6-month phase before the agreement is terminated.

This is where Canada will be caught off guard and the economic collapse will likely be rapid and catastrophic.

Canada will only just begin to think about the “exit” scenario, once the non-renewal announcement is made.  It will take them a while to realize how vulnerable they are – they are currently in full denial mode.

During this period, President Trump carries massive leverage against Canada.  He will likely probe their trade position and willingness to comply with reciprocity after the non-renewal announcement.  The outcome of those probes will determine the timeline of his exit announcement.

During this non-renewal phase, we may even see President Trump tease the exit, then retract, then tease the exit again.  Each time Trump tests the Canadian government with statements, the Canadian economy will pulsate and weaken; it will drive the Canadian government to either extreme anger, or defeated compliance.

Timing the completion of the U.S-Mexico deal within the probes of Canada will be super interesting.  At some point as the U.S. closes in on the deal with Mexico, Canada is going to realize they are naked without any agreement.

The worst-case scenario for Canada is President Trump announcing the USMCA exit on the same day he announces a completed bilateral deal with Mexico.

It would be the worst-case scenario for Mark Carney because the ignored voices of those few people in Canada who have been trying to warn about this would suddenly get a lot of attention.