The Trump administration is expected to formally announce Wednesday that it will not renew the U.S.-Mexico-Canada trade pact, kicking off a decade-long process to end the North American free trade zone and an agreement President Trump implemented during his first term.
The USMCA is set to automatically expire on July 1, 2036, unless all three member countries agree to formally renew it for an additional 16 years.
If any country declines the extension, the agreement enters a cycle of annual reviews over the next decade. If all three countries agree to extend the USMCA for 16 years, another review will be scheduled for 2032.
Mr. Trump told reporters earlier in June that he doesn’t plan to renew it.
“I’m not looking to renew it,” the president said. “I made the deal and the primary reason I made the deal is that NAFTA was the worst trade deal I’ve ever seen. And I made it better. But I had the right to terminate.”
Mr. Trump said he plans to let the pact expire because American citizens “don’t need anything” from Canada or Mexico.
“But they need everything that we have to treat us better,” he said of the North American partners. “We don’t need their cars. We don’t need their lumber. We don’t need their energy. We don’t need anything.”
The heads of trade from the U.S., Canada and Mexico will meet virtually on Wednesday to determine whether they want to extend the pact. Canada has urged the U.S. and Mexico to renew the pact.
U.S. Trade Representative Jamieson Greer has already scheduled a third round of negotiations with Mexico for the week of July 20, suggesting that he would like to see changes in the existing deal.
Mr. Greer also has suggested that the USCMA won’t be renewed, or will at least undergo significant revisions. During testimony before Congress last year, he said that a “rubber stamp of the agreement is not in the national interest.”
Last month, a group of Democratic senators sent Mr. Greer a letter demanding a set of changes to the USMCA ahead of his talks with Mexico and Canada.
Led by Sen. Tammy Baldwin, Wisconsin Democrat, the 15 senators demanded any renewal include provisions to help labor unions by ensuring that both Canada and Mexico comply with their labor commitments.
They also said the USMCA has led to businesses relocating to Mexico where they can pay workers less.
“With workers in the Mexican automotive and electronics manufacturing sectors still only earning $3 to $5 per hour and Mexican manufacturing worker pay lower than China, U.S. companies continue to offshore at alarming rates and use the threat of offshoring to depress U.S. wages,” the senators wrote.
The Democrats also pressed Mr. Greer to enforce bans on goods made with forced labor in both Canada and Mexico. Mr. Trump earlier this month used the ban on forced labor as justification to impose his tariffs.
A separate group of 21 Democratic senators sent a letter to Mr. Greer in March urging him to strengthen the trade deal’s environmental provisions, saying they do little to enforce clean air or clean water requirements.
The Consumer Choice Center, an advocacy group representing American consumers, called on Mr. Trump to reverse course and renew the USMCA.
“Ending or undermining the USMCA doesn’t strengthen American negotiating power. It generates more uncertainty, which leads to less investment and fewer American exports flowing to its neighbors.,” said David Clement, policy director for the Consumer Choice Center.
Scott Lincicome, an economist for the libertarian Cato Institute, wrote in an op-ed that he believes claims the USMCA is on the brink of collapse are overblown.
“Yes, Trump could withdraw from the deal. But it’s a safe bet he’s bluffing,” Mr. Lincicome wrote.
He said the economics are just too strong to scuttle the deal because it has generated a tremendous amount of investment for the U.S. In 2024, trilateral trade between the three nations totaled $1.99 trillion and spurred $380 billion in direct foreign investment. That’s an increase of 37% and 16%, respectively, since the USMCA took effect in 2020, he wrote.
Mr. Trump’s first administration negotiated the USMCA to replace the 1994 North American Free Trade Agreement, which was established during the Clinton administration. At the time the USMCA was implemented, the Trump administration hailed the deal as “the fairest, most balanced and beneficial trade agreement we have ever signed into law.”
But Mr. Trump quickly turned on the USMCA as the United States’ trade deficit with Mexico grew as companies moved supply chains away from China after he imposed steep tariffs on Chinese products.
Last year, the U.S. had a $46 billion trade deficit in goods with Canada and a $197 billion deficit with Mexico, according to the U.S. Bureau of Economic Analysis.
However, the U.S. is currently only holding formal negotiations with Mexico, giving Canada the cold shoulder over a list of trade disputes ranging from Ottawa restricting the import of U.S. dairy products and its provinces pulling American liquor from store shelves.
There does not appear to be any formal plan to begin negotiations with Canada, though Mr. Greer continues to hold trade talks with Canadian Trade Minister Dominic LeBlanc.
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