US declines to renew USMCA trade pact with Mexico, Canada
Lengthy negotiations are expected as the Trump administration seeks changes to a trade deal with Mexico and Canada that has streamlined supply chains across North
Lengthy negotiations are expected as the Trump administration seeks changes to a trade deal with Mexico and Canada that has streamlined supply chains across North America. The United States on Wednesday decided not to renew the US-Mexico-Canada Agreement (USMCA), in its current form, US trade Representative Jamieson Greer said in a statement "The United States will continue to engage with Mexico and Canada to address the agreement's shortcomings and our trade deficits with these countries," Greer said. Although it wasn't extended by the Wednesday deadline, the deal remains in force for another 10 years and will now be reviewed annually, which sets up the possibility of protracted and complicated negotiations over everything from tariffs to trade rules governing specific sectors. The on-again, off-again negotiations are likely to cause more uncertainty for US automakers and farmers who depend on stable and interconnected supply chains underpinned by the deal. Trump sours on his own deal The decision from the administration of US President Donald Trump was widely expected, as Trump seeks to restructure the playing field with the US' top two trading partners. During his first term, Trump negotiated and heavily praised the USMCA as a superior alternative to the "disastrous" North American Free Trade Agreement (NAFTA), which he said had offshored US jobs, among other problems.
When signing the USMCA into law in January 2020, Trump called it the "largest, fairest, most balanced, and modern trade agreement ever achieved," and promised it would provide "jobs, wealth, and growth." Trump signed the USMCA in 2020, calling it a major victory Image: Drew Angerer/Getty Images Just six years later, Trump said in June he was "not looking to renew" the deal, and has even threatened to pull out of it altogether, which is considered an unlikely outcome. What is the USMCA? Largely based on the framework of NAFTA, the USMCA restructured supply chains by enforcing stricter rules of origin, for example, requiring 75% of automotive components to be made within North America to qualify for zero tariffs. The deal also gave US farmers better access to markets in Mexico and Canada, along with provisions for the protection of intellectual property and trade in the digital sector. This regulatory stability drove a surge in trade within North America, and positioned Mexico and Canada ahead of China as the US' top trading partners. The integrated supply chains, and increased trade in goods and services within North America amounted to nearly $2 trillion in 2024.
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