The U.S. will not renew its trade agreement with Canada and Mexico, senior administration officials announced on Wednesday — another example of the president’s increasing willingness to leverage trade policy against even the country’s allies.
Wednesday marked the deadline for the U.S., Mexico and Canada to renew the USMCA trade agreement, though President Donald Trump has signaled wavering interest in maintaining the deal as is for months. Instead, the White House said it would now conduct yearly reviews of the deal Trump signed in his first term, which he called “the best agreement we’ve ever made.”
“We chose not to rubber-stamp USMCA renewal without addressing existing issues,” a senior administration official told reporters on Wednesday. “In other words, the United States did not agree to renew the USMCA in its current form.”
Over the past several months of negotiations, the Trump administration sought to reduce the trade deficit with the two countries and increase U.S. market access. Dairy industry disputes with Canada, corn exports to Mexico and “constant threats to our trade and energy” are among the reasons the U.S. backed out of renewing the deal, the official said on Wednesday.
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The countries will have 10 years to reach an agreement on outstanding issues before the USMCA expires in 2036. Canada and Mexico, the country’s top trading partners, were interested in extending the agreement by 16 years — though renegotiation talks with Canada had been fragile for months.
“They did not deliver on some of the things that we expected,” the official said. “These were always under threat, which is not what the agreement was intended to be. So that’s really what is at the heart of it.”
Last year, the U.S. imported more than $900 billion in Mexican and Canadian goods, which are tariff-free under the USMCA.
The decision will hit industries running supply chains up and down the continent hardest, such as automotive companies that manufacture parts across the borders and assemble vehicles in the U.S., or the steel and aluminum industries that source its metals in Canada.
Mexico and Canada found themselves on opposite ends of the Trump administration’s favor heading into the negotiations. The senior administration official noted that Canada is one of the few countries that “retaliated” against Trump’s tariff policies, while Mexico has been a more cooperative negotiating partner.
The U.S. will hold a third round of bilateral talks with Mexico during the week of July 20 to discuss outstanding issues, including economic security, labor violations, the environment and intellectual property, the official said. Among the U.S.’s biggest concerns are rules of origin — provisions that dictate from where manufacturing parts must come, so countries like China can’t benefit from the agreement’s terms.
Talks will continue with Canada as well, though the official did not address when those will take place.
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