Home
+
Published : 01 Jul 2026, 10:18 AM
US President Donald Trump's administration is expected to formally declare on Wednesday that it will not extend the US-Mexico-Canada Agreement on trade, starting a decade-long clock to wind down the 32-year-old North American free trade zone as the three countries haggle over proposed changes.
That declaration will kick off a six-year review session, part of a "sunset clause" negotiated by President Donald Trump's first administration. However, it will do little to alter contentious negotiations over the pact's future, including sweeping demands to boost US and regional content in North American automotive production and trade protections to block Chinese goods from benefiting from USMCA.
Trade chiefs from the US, Mexico and Canada are expected to meet virtually on Wednesday and declare whether they want to extend the pact for another 16 years.
A spokesperson for US Trade Representative Jamieson Greer said he has made no formal announcement of his intention towards USMCA. But Greer has already scheduled a third round of negotiations with Mexico for the week of Jul 20, signalling his intent to keep pushing for changes.
"We expect July 1st to come and go, and for the United States to not confirm its wish to extend," said Greta Peisch, a former USTR general counsel who is now a trade partner at Wiley Rein in Washington.
Peisch added that it's unclear "whether the US says exactly what it's looking for in a public way" in a statement expected after the meeting.
Mexico's economy minister, Marcelo Ebrard, said on Tuesday he does not expect the trilateral trade agreement to be scrapped. The country's president, Claudia Sheinbaum, also said on Tuesday that she had signed a letter calling for the USMCA to be extended for 16 years.
Canadian Prime Minister Mark Carney said he expected a "constructive exchange" between the three countries but no agreements to sign.
"The priority is to get a new deal," Carney said. "We're ready to negotiate an improvement of this agreement."
Trump has already unilaterally ended the duty-free status of USMCA by imposing tariffs of 25% on Canadian and Mexican autos and parts and 50% on steel and aluminium from the two countries, prompting retaliation from Canada.
Although Canada has not yet participated in formal negotiations with the US, Carney said technical talks on aluminium, steel, autos and softwood lumber have produced some improvements.
"So we're ready to continue those discussions but that will take time, which we've known for a while," Carney added.
Failure to reach agreement on revisions to USMCA would keep the trade pact in an indefinite limbo, with similar review sessions annually for the next 10 years, after which the North American trade pact would expire on Jul 1, 2036.
The review and sunset process, which was considered controversial when it was enacted, is separate from a termination clause that US President Donald Trump or his Mexican and Canadian counterparts could exercise, triggering a US withdrawal from the pact within six months.
Trump, whose first administration negotiated USMCA to replace the 1994 North American Free Trade Agreement, hailed its 2020 launch as "the fairest, most balanced and beneficial trade agreement we have ever signed into law."
But he quickly soured on USMCA as the US goods trade deficit with Mexico expanded, partly because companies shifted supply chains away from China after he imposed steep tariffs on Chinese goods. Trump frequently says that he doesn't want to renew USMCA, favouring instead the steep tariffs that he has imposed on Mexican and Canadian autos, steel and aluminium.
US, Mexico Talk Without Canada
For now, the US is holding formal negotiating rounds with Mexico only, leaving Canada to the side amid a long list of bilateral trade irritants ranging from Canada's restricted dairy market to Canadian provinces pulling American liquor from store shelves.
Greer has not planned any formal trade negotiations with Canada but has held regular discussions with Canadian trade minister Dominic Le Blanc.
North American automakers have urged the Trump administration to maintain the trade pact as a trilateral agreement, saying parts often flow multiple times across the northern and southern US borders before assembly into vehicles.
Matt Blunt, president of the American Automotive Policy Council, a trade group representing Ford, General Motors and Stellantis, urged a swift and durable resolution that provides investment certainty and a level playing field.
"North American economic integration enables enormous competitive benefits for the region, and American Automakers are encouraged by ongoing negotiations with the US, Mexico and Canada," Blunt said in a statement. "US automakers currently face a disadvantage versus imports from countries whose exports face a flat 15 percent tariff and are not subject to comparable rules of origin."
In the Mexican negotiations, the US has demanded that all North American-built vehicles contain 50% US-specific content, a figure that would drive regional required content up to 82% to qualify for US benefits, sources familiar with the talks have said. Vehicles assembled in Mexico and Canada would still likely be charged some level of tariffs, Greer has said.
A Mexican official said that the US and Mexico have discussed the idea of a universal global tariff of 15% on autos, but a lower rate for vehicles from Mexico and Canada if they agree on stricter rules of origin.
The official said Mexico and the United States broadly agree on USMCA’s problems: A steady decline in US manufacturing jobs, falling US content in autos as Asian parts increase, and concerns over increasing transshipment.
"Mexico and the US are in agreement about the goals. What we are discussing is how to reach them," the official added.
