The Trade Battle is Heating Up — Here's How Smart Businesses Are Preparing for Tariff Wars and Trade Negotiations

As we approach 2026, the looming renegotiation of the United States-Mexico-Canada Agreement (USMCA), compounded by the unpredictable political landscape in the U.S., presents a potential minefield for businesses engaged in cross-border trade.

Regardless of which administration takes power after the 2024 elections, the agreement will likely be revisited, impacting industries ranging from manufacturing to agriculture. Business owners who prepare now for potential changes will be far better positioned to weather the storm.

Whether it's changes to the "country of origin" rules or the threat of new tariffs, proactive planning is essential for business leaders looking to avoid being caught off guard.

Below are three factors entrepreneurs should be tracking as the global trade landscape shifts.

Related: What Is a Tariff? Here's an Overview of the Basics

1. Strengthening supply chain resilience

One of the fundamental changes expected is a revision of the rules around the "country of origin," which determine whether goods qualify for tariff exemptions under the USMCA. Under the agreement, goods must have a significant percentage of their components sourced from North America to avoid tariffs. However, foreign companies have been adept at finding loopholes. For example, Chinese firms funnel products through countries like Mexico and Vietnam to meet trade agreement conditions.

For businesses that rely on imports, this means an increased risk of tariffs on goods they once imported freely. The auto industry has already been hit with stricter standards requiring 75% of a vehicle's parts to be North American-sourced. Other industries like electronics or apparel may soon follow suit. Entrepreneurs should assess their supply chains now and consider sourcing more components locally to avoid getting caught in regulatory shifts that could drive up costs.

Business owners should audit their supply chains for vulnerabilities and work with trade experts to ensure compliance with evolving USMCA rules. This might also be an opportunity to explore new partnerships with North American manufacturers to diversify sources and mitigate risks.

2. Preparing for tariffs as governments seek new revenue streams

With governments facing financial shortfalls due to global economic pressures, such as the impact of the pandemic and war in the Ukraine, there's a growing likelihood that tariffs will be used as a revenue-raising tool. Both parties in the U.S. have strong incentives to revisit tariffs on industries like steel, aluminum and even technology products.

For entrepreneurs, this could mean additional costs not only on raw materials but on the goods they export to other markets. Considering Canada and the U.S. exchanged approximately $1.5 billion in goods daily in 2022, any changes to tariffs could disrupt operations significantly. What might seem like a small tariff increase on one end of the supply chain could create ripple effects, raising costs for manufacturers and distributors and ultimately impacting pricing for customers.

Develop contingency plans that account for potential tariff increases. Entrepreneurs should consider budgeting for cost hikes and building flexibility into their supply chains by diversifying suppliers and renegotiating contracts to protect against sudden price shifts.

Related: 2 Years Since Trade Deal with China, Tariffs Aren't Working for American Businesses

3. Manufacturing jobs: A potential shift south

The U.S. push to bring more manufacturing jobs home could have significant implications for businesses in Canada and Mexico. Currently, many American firms choose to manufacture goods in Canada or Mexico due to favorable labor costs. However, changes to trade agreements or the imposition of tariffs on certain goods could reverse this trend, driving up costs for businesses reliant on cross-border supply chains.

This shift presents both challenges and opportunities. If manufacturing jobs move south to Mexico due to cheaper labor rates or back to the U.S. to take advantage of new incentives, Canadian manufacturers may face job losses and increased competition. On the other hand, businesses could find opportunities to fill gaps in domestic markets or expand into new regions if they can pivot quickly enough.

But before any major shift happens, there's a critical need for discussion within the industry to ensure the right infrastructure is in place. Without that, the shift could lead to significant challenges for both countries. We've seen it with the steel industry — when duties are imposed before local capacity can handle demand, it leads to delays, shortages and increased costs that eventually hit consumers.

Entrepreneurs should stay agile and monitor political and economic developments closely. Exploring automation and investing in technology might help mitigate the higher costs associated with manufacturing closer to home.

While it's impossible to predict every change coming with the 2026 USMCA renegotiation or how political shifts will unfold, business owners who stay informed and prepare for a range of outcomes will be in the best position to thrive. The key is to stay ahead of regulatory changes, safeguard supply chains and explore opportunities that could arise as global trade realigns. By doing so, entrepreneurs can turn these challenges into opportunities for growth.