The United States has declined to renew the United States-Mexico-Canada Agreement (USMCA) on its existing terms, shifting instead to annual reviews. The decision was announced on Wednesday, the deadline for the three countries to jointly decide the pact's fate under a built-in review mechanism.
Decision Details and Immediate Impact
After virtual talks between officials from all three governments, the US trade representative's office confirmed that Washington had walked away from renewing the deal, which is set to expire in 2036. The refusal does not kill the pact outright; USMCA remains in force while negotiations continue, but it will now face a review every year rather than once every six years as originally designed.
A senior administration official, briefing reporters on a call, said President Donald Trump had “chose not to rubber stamp a USMCA renewal without addressing existing issues.” The official added: “So in other words, the United States did not agree to renew the USMCA in its current form. So, as a result, the USMCA is not renewed.”
US Justification and Criticism
The US trade representative, Jamieson Greer, stated that the US would “continue to engage with Mexico and Canada to address the Agreement's shortcomings.” The decision points to persistent US trade deficits with both neighbors. Trump has routinely criticized the USMCA of late, and last month threatened to abandon it. “We don't need anything that Canada has. We don't need anything that Mexico has, but they need everything that we have. And they have to treat us better,” he told reporters in the Oval Office.
However, Trump himself struck the deal in 2020 during his first term as an updated version of the 1992 North American Free Trade Agreement (Nafta). At the time, he described the USMCA as the “fairest, most balanced, and beneficial trade agreement we have ever signed into law.”
Reaction from Mexico and Canada
Mexico's economy minister, Marcelo Ebrard, said at a press conference on Wednesday that his government wants to address the issues raised by the US on foreign dependence. “There is no difference that I can identify between Mexico, the United States and Canada that is so big that we cannot resolve it,” he said, according to Reuters.
Economic Consequences
The shift to annual reviews raises the prospect of damaging businesses that rely on the USMCA and could limit investments across North America. The deal currently governs about $2 trillion annually in goods and services between the three countries, according to CNBC.
