Trump Administration Refuses to Renew USMCA, Triggering Annual Reviews for Canada and Mexico

The Trump administration announced Wednesday that it would not renew the United States-Mexico-Canada Agreement (USMCA) in its current form, instead triggering annual reviews that could lead to renegotiation of major parts of the treaty.

A senior administration official told reporters in a call announcing the move that Trump “chose not to rubber stamp a USMCA renewal without addressing existing issues,” and U.S. Trade Representative Jamieson Greer said the United States “did not agree to renew the USMCA in its current form.”

103.1 FM Country pop

The decision means the USMCA will stay in effect for another decade, provided no member tries to withdraw, while the three North American trade partners determine whether to extend the deal for another 16-year term.

CNBC reported the widely anticipated decision was revealed Wednesday, the deadline for the three partners to determine whether they would renew their agreement for another 16-year term, and Fox Business said the U.S. will pursue separate deals with Canada and Mexico that last for up to 10 years.

The Guardian said the refusal does not kill the pact outright because USMCA stays in force while negotiations continue, but it will now face a review every year rather than once every six, as originally designed.

After Trump described the USMCA as “irrelevant,” Mexico’s President Claudia Sheinbaum said at her morning press conference this Wednesday, “I am convinced that the trade relationship with the United States will continue.”

Sheinbaum added that “The economies of Mexico, the United States, and Canada are highly correlated,” and she said the American businesspeople who “recently bought a transformer company in the country” showed “confidence.”

ABC News

In Washington, U.S. Trade Representative Jamieson Greer confirmed Wednesday that the three countries met virtually for the required joint review and that “The United States did not agree to renew the USMCA in its current form.”

The Hill reported Greer said the agreement would remain “in force pending resolution of these issues or until the Agreement’s termination,” and it said the U.S. will meet with Mexico during the week of July 20 for a third round of bilateral negotiations tied to the USMCA joint review.

CNN en Español said Trump told reporters on Tuesday during a tour of Ford’s automotive plant in Detroit that he “hadn’t even thought” about the trade agreement being “irrelevant,” and he asserted that companies are relocating or expanding their plants on U.S. soil to manufacture vehicles locally.

The shift to annual reviews and the prospect of separate deals raised uncertainty for businesses that rely on USMCA, with the Guardian saying the decision could limit investments across North America and that the deal currently governs about $2tn annually in goods and services between the three countries.

NBC News reported the administration framed the move around trade deficits, with a senior Trump administration official saying “our trade deficits with both Mexico and Canada shot up during the Biden administration,” while also stressing periodic reviews are a feature of the deal.

In Canada, Dominic LeBlanc said Canada is “unwavering” in its support for the trade deal and noted it “remains fully in force until 2036 and can be renewed at any time for another 16-year period,” according to NBC News.

The U.S. focus on rules of origin and U.S.-made content also surfaced in business-facing analysis, with Car and Driver saying the federal government wants to raise the 75 percent regional content requirement and add a clause requiring that 50 percent of a vehicle’s parts specifically come from America.

Car and Driver also quoted the American Automotive Policy Council saying “North American economic integration enables enormous competitive benefits for the region,” while warning that U.S. automakers “face a disadvantage versus imports from countries whose exports face a flat 15 percent tariff” and urging a “swift and durable resolution” for “long-term certainty needed for capital-intensive automotive investments.”