US declines to renew USMCA trade pact with Mexico, Canada

The United States will not renew the US-Mexico-Canada Agreement (USMCA) in its current form, US Trade Representative Jamieson Greer announced on Wednesday. While the deal remains active for another decade, the decision sets the stage for potentially protracted and complicated negotiations over various trade aspects.

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The United States will continue to engage with Mexico and Canada to address the agreement's shortcomings and our trade deficits with these countries.

Although the deadline for renewal passed without an extension, the USMCA continues to be in effect for the next 10 years. However, the agreement will now undergo annual reviews, opening the door for ongoing discussions regarding tariffs and trade regulations across different sectors. This ongoing uncertainty is likely to impact US automakers and farmers who depend on the stable supply chains facilitated by the pact.

President Donald Trump's administration's decision was anticipated, as Trump has sought to reshape trade relationships with Mexico and Canada. During his first term, Trump championed the USMCA, calling it a superior replacement for the North American Free Trade Agreement (NAFTA), which he blamed for offshoring US jobs. Upon signing the USMCA into law in January 2020, he described it as the "largest, fairest, most balanced, and modern trade agreement ever achieved."

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The largest, fairest, most balanced, and modern trade agreement ever achieved.

However, Trump's view has shifted. In June, he expressed a lack of desire to renew the deal and even suggested withdrawing from it entirely, though this outcome is considered unlikely. The USMCA, largely based on NAFTA, introduced stricter rules of origin, requiring 75% of automotive components to be manufactured in North America for tariff-free qualification. It also aimed to improve market access for US farmers and included provisions for intellectual property and digital trade.

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not looking to renew

Despite the deal's role in driving significant trade within North America, reaching nearly $2 trillion in 2024, Trump has recently called it "irrelevant." He has criticized perceived loopholes that could benefit countries like China and expressed a desire to increase domestic auto production. The US also seeks to resolve disputes, such as Canada's protectionist dairy policies. Critics suggest these actions could lead to higher car prices. Greer indicated that a third round of talks between the three countries is scheduled for July 20 in Mexico City.

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irrelevant