The United States has announced that it will not renew the trilateral trade agreement with Canada and Mexico in its current form, a decision affecting a trade framework that supports approximately $1.6 trillion in annual commerce across North America.
The announcement came one day before the agreement was scheduled to undergo its first mandatory joint review under its built-in renewal process.
In a statement released on Wednesday, US Trade Representative Jamieson Greer said the United States would not agree to extend the US-Mexico-Canada Agreement (USMCA) "in its current form," signalling that Washington wants significant changes to the pact before committing to a long-term renewal.
According to the statement, the United States will continue negotiations with Canada and Mexico to address what it describes as weaknesses in the US-Mexico-Canada Agreement (USMCA), as well as trade imbalances with both countries. Until those issues are resolved—or unless the agreement is formally terminated—the USMCA will remain in force.
The statement also confirmed that US officials are scheduled to hold a third round of bilateral talks with Mexico during the week of 20 July as part of the agreement's mandatory joint review process.
The decision not to support a long-term renewal follows repeated comments by Donald Trump questioning the value of the trade pact. In January, Trump said the agreement offered "no real advantage" and was "irrelevant." He later added that he was uncertain whether his administration would renew it.
At the same time, Trump indicated that discussions with Canada and Mexico would continue, suggesting that Washington remains open to negotiating a revised version of the agreement rather than abandoning it altogether.
The USMCA, which replaced NAFTA in 2020, continues to govern trade among the three North American countries while negotiations over its future proceed.
What is the USMCA?
The US-Mexico-Canada Agreement (USMCA) entered into force on 1 July 2020 during the first administration of Donald Trump, replacing the 1994 North American Free Trade Agreement (NAFTA).
According to the United States Department of State, the USMCA was designed to create a more balanced and reciprocal trading relationship among the United States, Canada, and Mexico. The agreement aims to support higher-paying jobs, strengthen regional supply chains, and promote economic growth across North America through updated rules on trade, investment, labour, and digital commerce.
In addition to modernising traditional trade rules, the US-Mexico-Canada Agreement (USMCA) introduced several new chapters reflecting changes in the global economy.
These include provisions on digital trade, anti-corruption measures, and good regulatory practices aimed at improving transparency and cooperation among the three countries. The agreement also contains a dedicated chapter focused on supporting small and medium-sized enterprises (SMEs), with the goal of helping smaller businesses benefit more easily from cross-border trade opportunities within North America.
The United States' decision not to approve a long-term renewal activates the USMCA's built-in "sunset clause," a provision negotiated during Donald Trump's first term.
Under this mechanism, the agreement enters a formal review process in which the three member countries regularly assess its future. Because the United States has declined to renew the pact in its current form, negotiations over possible amendments are expected to continue in the coming years.
If the United States, Canada, and Mexico fail to reach a new agreement or approve an extension before the deadline, the USMCA will automatically expire on 1 July 2036, bringing an end to the current North American trade framework.
What is Trump’s criticism of the deal?
Last month, Donald Trump again questioned the value of the US-Mexico-Canada Agreement (USMCA), saying the United States did not depend on imports from Canada or Mexico to the same extent that those countries depended on access to the US market. He argued that both trading partners should offer the United States more favourable treatment.
Ahead of the administration's announcement, Jamieson Greer said additional time was needed to address what Washington considers shortcomings in the agreement. Among the concerns cited were growing US goods trade deficits, which reached approximately $197 billion with Mexico and $48.3 billion with Canada in 2025.
In Canada's case, much of the trade deficit reflects US imports of crude oil, as Canada remains the largest foreign supplier of oil to the United States. Meanwhile, the deficit with Mexico has increased as many manufacturers relocated production from China to Mexico to avoid US tariffs on Chinese goods, resulting in a larger share of imports entering the United States from Mexico.
According to a Trump administration official quoted by Reuters, the president remains cautious about the current trade relationship despite imposing 25% tariffs on automobiles, 50% tariffs on steel and aluminium, and 10% tariffs on Canadian lumber, signalling that Washington still believes further changes to the USMCA may be necessary.
How have Mexico and Canada responded?
Marcelo Ebrard said Mexico is committed to working with the United States to address concerns over trade deficits and the impact of cross-border trade on American jobs.
Speaking at a news conference on Wednesday, Ebrard said he believes the differences between Mexico, the United States and Canada are not so significant that they cannot be resolved through negotiations. His remarks came after he participated in a virtual meeting with Jamieson Greer and Dominic LeBlanc.
Ebrard stressed that protecting Mexico's automotive industry remains a top priority in discussions with Washington, saying his government would not allow the country's vehicle manufacturing sector to be placed at a competitive disadvantage.
LeBlanc also said Canada would continue negotiations with the United States over tariffs imposed on Canadian steel, aluminium, automobiles and lumber. He added that all three countries agreed on the importance of maintaining discussions and finding ways to ensure that trade and investment rules continue to support North America's economic prosperity and global competitiveness.
What happens next?
With both Canada and Mexico signalling willingness to continue negotiations, the US-Mexico-Canada Agreement (USMCA) is expected to remain in force for now, with trade continuing under existing rules until at least 2036 unless a new deal is reached earlier.
However, analysts note that the United States could use tariffs as leverage during ongoing talks, applying pressure to secure changes in areas it considers problematic within the agreement.
One alternative scenario being discussed is a shift toward more bilateral trade arrangements between the United States and each partner individually. While such deals could allow for more targeted negotiations, economists say they would likely not match the scale, stability, or overall trading volume provided by the current trilateral USMCA framework, which underpins a major share of North American commerce.
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