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The United States has declined to renew its trade pact with Canada and Mexico in its current form, choosing to keep the deal running through yearly reviews instead of locking in another 16 years.
Some shit you should know before you dig in: If you’re unaware, the United States-Mexico-Canada Agreement (USMCA) is the free trade deal that governs how goods and services move between the three North American countries. In plain terms, it’s the rulebook that lets a huge share of products cross the US, Mexican and Canadian borders without getting slapped with tariffs, as long as they meet certain conditions. Trump negotiated it during his first term to replace NAFTA, the older 1994 deal he talked mad shit on and accused of being a job killer for pushing US factories south to take advantage of cheap Mexican labor. The USMCA kept a lot of NAFTA intact but tightened the rules (requiring 75% of a car’s content be made in North America to qualify for duty-free treatment, and pressuring factories to pay higher wages, partly to stop Chinese goods from sneaking across borders tariff-free). The scale of trade is enormous, with the three countries exchanging roughly $1.9 trillion a year. Notably, Canada and Mexico have overtaken China as America’s top two trading partners.
What’s going on now: US Trade Representative Jamieson Greer confirmed Washington wouldn’t sign off on the deal as written. He said, “The United States did not agree to renew the USMCA in its current form. As a result, the USMCA is not renewed.” He noted that the US would keep engaging with both countries to address “the Agreement’s shortcomings and our trade deficits.”
Crucially, the move doesn’t kill the pact. The deal holds until its 2036 expiration, but rather than getting checked once every six years, it’ll now come up for review annually (a shift that businesses fear will inject fresh uncertainty into North American trade and investment). A senior administration official speaking to one outlet said Trump “chose not to rubber stamp a USMCA renewal without addressing existing issues,” and noted he’d already reshaped the trading relationship through the tariffs he imposed earlier in his second term. The core US complaint is its trade deficits with both neighbors ($46 billion with Canada and $197 billion with Mexico).
This all comes as the US has already begun bilateral talks with Mexico and plans a third round the week of July 20, with Economy Minister Marcelo Ebrard saying his government wants to resolve US concerns and voicing confidence the review can wrap “within a reasonable time frame.”
Canada, by contrast, hasn’t started its own talks and drew sharper words from the administration, which singled it out as one of the few countries besides China to retaliate against Trump’s tariffs. Canada had pushed to renew the deal for a full 16 years before the deadline, and Internal Trade Minister Dominic LeBlanc said the three sides agreed on the importance of continuing discussions.
