President Donald Trump's administration will attempt to substantially revise terms of the US-Mexico-Canada (USMCA) trade agreement in the next decade, triggering a protracted negotiation period that could end with the treaty expiring in 2036.
The USMCA, negotiated during Trump's first term in 2018-20, set 1 July 2026 as a deadline for the three countries to agree on an extension, or to seek to revise its terms. The Trump administration has decided not to renew the deal in its current form, said Jamieson Greer, who heads the US trade representative's office (USTR), on Wednesday.
That decision does not immediately terminate the USMCA. The three countries will now hold annual reviews to seek consensus on a long-term extension beyond 2036, but any country can withdraw from the pact with six months' notice.
Greer's counterparts, Mexico's economy minister Marcelo Ebrard and Canada's trade minister Dominic LeBlanc, issued statements on Wednesday stressing that the agreement remains fully in force despite the US decision.
Public comments submitted to the USTR and US congressional hearings earlier this year showed broad support from energy, agriculture and other sectors for renewing the trade deal without changes.
But Trump has made it clear he was opposed to the renewal. "I'm not a big fan of" USMCA, he said last month. "We do better without an agreement."
The USTR has cited rising US trade deficits with Mexico and Canadian countermeasures during last year's trade war the White House launched with its neighbors as reasons for the decision not to automatically renew the USMCA.
Greer told US lawmakers previsously USTR will push to shore up US content requirements in products covered by the USMCA, especially in auto manufacturing. The agency will maintain its policy of exempting North American trade in energy, fertilizers and minerals from future tariffs.
USTR officials also told lawmakers that the US administration may seeks separate agreements with Mexico and Canada instead of a three-way deal. Ottawa and Mexico City have shown little support for that approach.
The USMCA provided a buffer against tariffs that Trump's administration leveled on Canadian and Mexican imports last year and is trying to recreate after the US Supreme Court in February struck down his ability to impose tariffs at will.
Canada and Mexico still face higher steel and aluminum tariffs than before Trump returned to office, but the USMCA has exempted most trade between the three countries from tariffs.
Trump's decision not to automatically renew the deal will weigh on investment and business decisions in the next decade, private sector executives have said.
"Once we get past 1 July, the forecasts change and economic conditions will gradually worsen every month no resolution is reached," said Victor Herrera, chief economist at Mexico's finance executives' association IMEF. "Investment will not pick up until that renewal is final."
The USTR will hold another round of trade talks with Mexico on 20 July to discuss possible changes, Greer said.
Canada will focus USMCA review discussions with the US "on addressing sectoral tariffs on Canadian steel, aluminum, autos and lumber," LeBlanc said.
