US President Trump and his advisors have reportedly indicated that the USMCA could be scrapped, NY Times reports. Instead, the US could have bilateral deals with Canada and Mexico.

• US officials have been increasing pressure on Canada.
• Canadian officials cited add that their expectation for a full renewal of the USMCA is very low. Officials believe Trump is trying to weaken Canada economically to force it to give up some protectionist policies.
• The article reminds us that in 2018, the US proposed a bilateral deal with Mexico and told Canada to get on board or be left out.

The potential scrapping of the USMCA in favor of bilateral deals with Canada and Mexico suggests a significant shift in US trade policy under Trump, increasing tensions and uncertainty in North American trade relations. This could have implications for the USD, with possible spillover effects on commodities and equities, particularly if market sentiment shifts towards pessimism regarding trade negotiations. Traders should watch for reactions in related assets, especially Canadian and Mexican currencies.