U.S. Declines to Renew US-Canada-Mexico Trade Pact

• The Trump administration on Wednesday, July 1, 2026, declined to renew the U.S.-Mexico-Canada Agreement (USMCA) in its current form. The decision starts a decade-long clock to wind down the trade deal as the U.S. seeks changes ‌to reshore manufacturing jobs and reduce U.S. trade deficits with Mexico and Canada.
• Following the agreement's six-year review, the USMCA will remain in force for another 10 years, with annual reviews before it expires, unless the three countries agree to renew it with changes. According to U.S. Trade Representative Jamieson Greer, the United States will continue to engage with Mexico and Canada to address the agreement's shortcomings and bilateral trade deficits.
• The U.S. will proceed with a bilateral negotiating round with Mexico during the week of July 20, focusing on strengthening North American rules of origin for automobiles and other industrial goods, as well as enhancing economic security to prevent other countries from benefiting from USMCA access.
• Mexican Economy Minister Marcelo Ebrard noted that Mexico would participate in the annual reviews while working to resolve outstanding disputes. Canada also advised that it would continue discussions on President Trump's tariffs on steel, aluminium, automobiles and lumber to support North American prosperity and competitiveness.
• The decision was widely expected, as the Trump administration has argued that more time is needed to address persistent U.S. trade deficits. President Donald Trump has also pushed for North American-built vehicles to contain 50% U.S. content, increasing the regional requirement to 82%.
• The decision to shift to annual reviews raises the prospect of uncertainty for businesses that rely on the USMCA and could limit investment across North America. The deal currently governs about US$2Tn annually in goods and services between the three countries

(Sources: Reuters & The Guardian)