US blocks long-term renewal of North American trade deal

 

A senior US official has said the United States has declined to renew the US-Mexico-Canada Agreement (USMCA) in its current form, preventing the automatic extension of the deal for another 16 years.

The official stated that the administration “chose not to rubber stamp a USMCA renewal without addressing existing issues,” adding that the United States “did not agree to renew the USMCA in its current form.”

Under the agreement’s rules, all three countries must unanimously agree to extend the pact. If they fail to do so, the official warned that it triggers a 10-year countdown toward possible termination.

For now, the agreement remains in force, but the lack of a long-term renewal has introduced fresh uncertainty into North American trade relations.

The USMCA underpins roughly $2 trillion (£1.5 trillion) in annual trade between the United States, Canada, and Mexico, making it one of the world’s most significant trade frameworks. However, it has faced ongoing pressure over unresolved disputes.

US trade officials have been pushing for changes before agreeing to a long-term extension, particularly on issues such as rules of origin for automobiles, access to Canada’s dairy market, and concerns that third countries—especially China—could use the agreement to indirectly access North American trade benefits.

Under the original terms of the USMCA, unanimous agreement to extend the pact would have kept it in force until 2042. However, with the United States opting not to support a long-term renewal in its current form, the agreement now moves into a more uncertain phase.

Instead of a single extended framework, the three countries will now be required to meet annually to review and potentially renegotiate its terms. This shift effectively triggers a 10-year countdown toward possible termination of the agreement as early as 2036, depending on future political decisions.

Business organisations across North America had pushed for a straightforward extension, arguing that long-term stability is essential for industries that depend heavily on cross-border supply chains. The US Chamber of Commerce, for example, warned that sectors such as manufacturing and agriculture require predictable trade rules to operate efficiently.

However, not all industry groups opposed the change. Some US-based organisations, including the American Iron and Steel Institute and the Steel Manufacturers Association, welcomed the move, saying that annual reviews could give American negotiators more leverage to push for changes to the agreement.

The current tensions come six years after the USMCA came into force, replacing the 1994 North American Free Trade Agreement (NAFTA). The updated deal introduced reforms covering digital trade, labour protections, and regional manufacturing rules, including stricter requirements for vehicle parts to be produced within North America.