U.S. not dictating terms of USMCA talks, Carney says

The market is likely underestimating how much this becomes a margin and working-capital story before it becomes a headline trade story. If the review drags, firms with cross-border just-in-time exposure face a two-step hit: first from tariff uncertainty widening supplier spreads and inventory buffers, then from financing costs as buyers pre-stock against policy risk. The biggest second-order winners are domestic substitution plays and logistics intermediaries that can re-route North American flows, while the losers are mid-cap industrials and auto suppliers with low pricing power and high Canada/U.S. mix.

The key risk is not a clean breakdown, but a prolonged “managed uncertainty” regime lasting months. That scenario is worse for equity multiples than an outright resolution because it keeps capex on hold, delays order normalization, and preserves the discount on cyclical names tied to steel, aluminum, and auto throughput. It also raises the probability that any concession set becomes a rolling precedent, making each future sector dispute easier to weaponize.

Contrarian read: the consensus may be too focused on whether the pact survives and not enough on the probability that it survives in a degraded form. A partial deal with selective carve-outs and residual levies would still be headline-positive but earnings-negative for the most exposed names, especially where investors have been modeling tariff reversal as binary relief. That creates a classic sell-the-rally setup in Canada-linked cyclicals if talks produce delay without removal of sector-specific penalties.