The Trump administration announced Wednesday that it will not renew the United States-Mexico-Canada Agreement in its current form, triggering a mandatory annual review process that will continue for a decade and opening what could be an extended and contentious renegotiation of the trade framework that governs nearly $2 trillion in annual commerce across North America. The decision — made on the exact six-year anniversary of the agreement taking effect — ends the possibility of a straightforward 16-year extension and introduces a sustained period of uncertainty for businesses, workers and supply chains across all three countries.
What Was Decided and Why
The Trump administration announced Wednesday it will not renew its trilateral trade pact with Canada and Mexico, instead opting to conduct annual reviews of the treaty that President Donald Trump once called “the best agreement we’ve ever made.”
“The United States did not agree to renew the USMCA in its current form,” said US Trade Representative Jamieson Greer 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.”
A senior Trump administration official told reporters the president chose not to rubber stamp a USMCA renewal without addressing existing issues. Trump’s primary concern with USMCA centres on the US trade deficits with the two trading partners. “We believe that the USMCA did not operate to control the deficit like the president intended, so that’s really the heart of it,” the official said.
The official added that the US and Mexico, although presenting many challenges, had been more constructive in their relationship, with a third round of bilateral negotiations scheduled in Mexico City for July 20. Canada, by contrast, was described as being in “a different position,” with the official accusing Ottawa of not addressing many of the non-tariff barriers and trade challenges the US has raised.
What the Decision Actually Changes
The framing matters enormously here, because the headline is more dramatic than the immediate practical reality — but the long-term implications are genuinely significant.
The USMCA is set to automatically expire on July 1, 2036, without renewal. The agreement will remain in force pending resolution of issues raised by the administration. USMCA does not go away anytime soon, as analysts noted. The agreement stays operational. But by declining to renew it, the US has triggered a cycle of mandatory annual reviews that will continue until the USMCA expires or is formally renegotiated.
Any country can withdraw from the deal with six months’ notice. A senior Trump administration official said the president reserves the right to withdraw from the agreement entirely — a more drastic option that would require six months’ notice and would immediately jeopardise the tariff-free access that undergirds North American manufacturing, agriculture and trade.
What Was at Stake
The USMCA encompasses one of the world’s largest free trade zones, with a total population of more than 510 million and an economy of nearly $31 trillion in nominal GDP — nearly 30 percent of global economic output. In the six years since CUSMA took effect, replacing the North American Free Trade Agreement, the value of trade between the three countries has grown by 37 percent, now exceeding $1.9 trillion annually.
The deal covers automotive rules of origin requiring 75% of vehicle content from within the bloc, agricultural market access, intellectual property protections for pharmaceuticals and digital trade, dispute resolution mechanisms and rapid response labour enforcement tools for Mexico. All of these provisions remain in effect — but all of them are now subject to annual review and potential renegotiation.
USMCA is particularly valuable to the Canadian economy because it exempts nearly 90 percent of Canada’s exports to the US from the tariffs Trump has imposed since his return to the White House in January 2025. Canada is seeking relief particularly from tariffs on steel, aluminium, autos and softwood lumber — none of which is addressed by the non-renewal announcement.
The Political Reversal at the Heart of the Story
The most striking aspect of Wednesday’s decision is the reversal it represents. Trump negotiated the USMCA during his first term after pulling out of the North American Free Trade Agreement, which he had campaigned against. He signed it in 2018 and celebrated its implementation in 2020, calling it “the fairest, most balanced, and beneficial trade agreement we have ever signed into law.”
He has since soured on his own creation. “I don’t know that I’m going to renew it,” Trump said in June. “We don’t need anything that Canada has. We don’t need anything that Mexico has, but they need everything that we have.” He said he plans to let the pact expire because American citizens “don’t need anything” from Canada or Mexico — a claim that trade economists, the agricultural lobby, and the auto industry all challenged publicly.
The Trump administration has tried leveraging tariffs to force Mexico and Canada into what it considers fairer trade practices. Yet a US Supreme Court decision in February rejected Trump’s sweeping global tariffs under IEEPA, forcing the administration to seek alternate methods to make Mexico and Canada pay up.
What the Key Players Have Said
Canada formally asked the United States and Mexico to renew the agreement on June 1. Canada and Mexico were similarly happy with the deal in its existing form. Canada’s Prime Minister Mark Carney, responding to Trump’s earlier threats, said: “What I’ve seen with the president is that you’re not close to making a deal and then you make a deal.”
Mexico City and Ottawa both expressed their desire to extend the agreement in the weeks leading up to the deadline. Both governments said Wednesday that discussions would continue.
US advocates for renewal argued the economics are too strong to scuttle the deal. In 2024, trilateral trade among the three nations totalled $1.99 trillion and spurred $380 billion in direct foreign investment. The powerful agricultural lobby warned that any serious threat to the agreement risks driving up business uncertainty and consumer costs — both of which pose political dangers for Republicans at a moment when their control of Congress is at risk in the 2026 midterms.
What Happens Next
The near-term timeline is relatively clear. The USTR will meet with Mexico during the week of July 20 for a third round of negotiations. Canada talks have not yet formally begun. Annual reviews will occur each July 1 going forward, with each review providing the opportunity to demand concessions or, in the most extreme scenario, trigger withdrawal.
One school of thought holds that it would be politically advantageous for the Trump administration to reach a deal by Labour Day so that Trump could sell it as a big win ahead of the 2026 midterms. The other school holds that the administration sees no advantage in rushing — that dragging out the talks exhausts Canada and Mexico into making concessions they would not otherwise accept.
What is clear is that the North American trading relationship — the world’s largest bilateral trading corridor in the case of the US-Canada relationship — has entered a period of deliberate and managed uncertainty. For every business that has built a supply chain across borders on the assumption of USMCA continuity, Wednesday’s announcement is a signal that no assumption can be taken for granted.
