The United States has declined to approve a long-term renewal of the U.S.-Mexico-Canada Agreement, pushing the North American trade pact into a new period of uncertainty as Washington seeks changes to the deal.
U.S. Trade Representative Jamieson Greer said the United States would not renew USMCA in its current form following a virtual meeting with officials from Canada and Mexico on July 1. The agreement remains in force for now, but the decision triggers a review process that could continue annually for the next decade unless the three countries agree on revisions.
USMCA, which replaced NAFTA in 2020 during President Donald Trump’s first administration, includes a sunset clause requiring the three countries to review the pact six years after it took effect. If all three governments agreed to extend it, the deal would have been renewed for another 16 years. Instead, the U.S. decision not to sign off starts a 10-year countdown that could lead to the agreement expiring on July 1, 2036.
The Trump administration is pushing for changes aimed at reducing U.S. trade deficits, strengthening North American manufacturing and tightening rules that determine which goods qualify for USMCA benefits. Washington has also raised concerns about transshipment and the possibility of Chinese-made goods moving through Mexico or Canada to benefit from preferential trade treatment.
Mexico and Canada have signaled they want to keep the agreement alive. Mexican President Claudia Sheinbaum said she had signed a letter supporting a 16-year extension, while Economy Minister Marcelo Ebrard said he does not expect the pact to collapse. Canadian Prime Minister Mark Carney said Canada is ready to keep negotiating, calling the priority a new and improved deal.
The U.S. has already scheduled another round of talks with Mexico for the week of July 20, while formal negotiations with Canada have not advanced in the same way. Canada and the U.S. have still held technical discussions around steel, aluminum, autos and softwood lumber, with Carney saying some progress has been made.
The trade relationship has already been strained by tariffs. Trump has imposed 25% tariffs on Canadian and Mexican autos and auto parts, along with 50% tariffs on steel and aluminum from both countries. Canada has retaliated, and those measures have complicated the broader effort to preserve a stable North American trade framework.
Automakers are especially concerned about the future of the agreement because North American vehicle production relies on parts crossing U.S., Canadian and Mexican borders multiple times before final assembly. The American Automotive Policy Council, which represents Ford, General Motors and Stellantis, has urged the countries to reach a durable solution that gives manufacturers investment certainty and keeps the region competitive.
One major U.S. demand in talks with Mexico would require North American-built vehicles to contain 50% U.S.-specific content. Sources familiar with the negotiations have said that could effectively raise the overall regional content requirement to 82% for vehicles to qualify for U.S. benefits. Greer has also indicated that vehicles assembled in Mexico and Canada could still face some level of tariffs.
A Mexican official said the U.S. and Mexico have discussed the idea of a universal 15% global auto tariff, with a lower rate possible for vehicles from Mexico and Canada if both countries agree to stricter rules of origin. The official said Mexico and the U.S. broadly agree on the goals, including stronger manufacturing, higher North American content and reduced transshipment, but remain divided over how to get there.
The review process is separate from USMCA’s termination clause, which would allow any of the three countries to withdraw from the pact with six months’ notice. For now, the agreement remains active, but without a long-term renewal, businesses across the region are facing an extended period of uncertainty over rules, tariffs and investment planning.
