Avison Young says the real risk is not CUSMA's collapse but tightening rules of origin
The July 1 review of the Canada-United States-Mexico Agreement (CUSMA) has passed without a 16-year extension, but global commercial real estate advisory firm Avison Young says the greater danger for Canadian investors and occupiers is not the agreement's collapse — it is the recurring uncertainty that annual reviews will now generate across the trade horizon.
The United States declined to renew CUSMA in its current form at the mandatory joint review, rejecting both Canada's and Mexico's formal bids to extend the deal to 2042.
CUSMA remains in force until 2036, and Canadian goods that satisfy the agreement's rules of origin continue to qualify for preferential access to the US market.
According to RBC Economics, approximately 90% of US imports from Canada have remained duty-free throughout the tariff dispute, largely owing to CUSMA's protections. That backstop now operates, however, within a framework of annual negotiations, a structural shift with real consequences for business investment and, by extension, Canada's housing and lending markets.
The United States has declined to renew the Canada-United States-Mexico Agreement (CUSMA), opting instead for a decade of annual reviews.https://t.co/Z8uAXvh5Ht
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 3, 2026
Rules of origin are the watch item
Marie-France Benoit, Principal and Director of Market Intelligence at Avison Young Canada in Montreal, outlined the firm's post-review assessment with precision.
"The July 1 review did not materially change the near-term outlook for North American trade. CUSMA remains in force, and Canadian goods that meet the agreement's rules of origin continue to benefit from preferential access to the U.S. market," she said.
"That said, the agreement has entered a new period of annual reviews and negotiations, creating a degree of policy uncertainty that could weigh on business investment and occupier decision-making. The key risk is no longer the abrupt loss of CUSMA, but the possibility of more restrictive rules of origin and increased compliance requirements over time."
That framing has direct relevance for brokers operating in a market shaped by developers' lending decisions and supply constraints. For new construction projects — already weighed down by elevated financing costs and tighter margins — annual reviews introduce recurring uncertainty into supply-chain costing and project timelines.
Tracy Valko, founder of Valko Financial in Ontario, previously told Canadian Mortgage Professional that "with US tariff risks and global economic pressures, mortgage rates may remain volatile."
Benoit's long-run counsel reflects a similar discipline. "While the review process will inevitably generate periodic market volatility, investors and occupiers are generally best served focusing on long-term economic and real estate fundamentals," she said.
Holding pattern on rates
For mortgage brokers managing client expectations, the latest development reinforces what has become a familiar theme.
The Bank of Canada has held its policy rate at 2.25% since October 2025, with trade uncertainty consistently cited as a central factor in its pause.
Fixed mortgage rates remain elevated as bond markets price in ongoing trade risk.
Sal Guatieri, senior economist at BMO Capital Markets in Toronto, told Canadian Mortgage Professional that "it's the economic uncertainty, both related to the trade war and the Iran war, that will likely keep a lot of buyers, especially first-time buyers, on the sidelines."
Canada Mortgage and Housing Corporation (CMHC) projects the Canadian economy will expand just 0.7% in 2026, among the weakest non-recessionary performances on record, with trade tensions a leading drag.
Polling conducted by Fidelity Investments Canada in June 2026 found that clients are raising CUSMA concerns directly with their financial advisers, with 63% of advisers citing rising costs from tariffs or supply chain disruptions as the most common issue they are fielding.
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