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 another 16-year term.
If any country declines the extension, the agreement enters a cycle of mandatory annual reviews over the next decade to consider renewal. However, if all three countries do choose to extend the USMCA, the next joint review would be scheduled for 2032.
“I’m not looking to renew it,” Mr. Trump said earlier in June. “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 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 scheduled a third round of negotiations with Mexico for the week of July 20, suggesting that he would like changes to the existing deal.
Mr. Greer has also suggested that the USMCA will not be renewed or, at least, undergo significant revisions. During testimony before Congress last year, he said a “rubber stamp of the agreement is not in the national interest.”
Scott Lincicome, an economist for the libertarian Cato Institute, has said that 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 in an op-ed.
He said the economics are too strong to scuttle the deal, because it has generated tremendous investment for the U.S. In 2024, trilateral trade among the three nations totaled $1.99 trillion and spurred $380 billion in direct foreign investment. That was an increase of 37% and 16%, respectively, since the USMCA took effect in 2020, he wrote.
Still, a group of 15 Democratic senators recently sent Mr. Greer a letter demanding changes to the USMCA ahead of his talks with Mexico and Canada.
Led by Sen. Tammy Baldwin of Wisconsin, the senators demanded that renewal include provisions to help labor unions by ensuring that Canada and Mexico comply with their labor commitments.
They also said the USMCA has led businesses to relocate 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 in 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 Canada and Mexico. Mr. Trump, earlier in June, used the ban on forced labor as justification for imposing 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. They said the provisions 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.
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.”
Mr. Trump quickly turned on the USMCA as the U.S. 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 goods trade deficit with Canada and a $197 billion deficit with Mexico, according to the U.S. Bureau of Economic Analysis.
The U.S. maintains trade deficits with Canada in lumber and with both Canada and Mexico in energy and cars. For example, the U.S. imports roughly $5.2 billion in Canadian lumber, accounting for more than half of U.S. lumber imports, according to the Congressional Research Service.
Energy is one of the largest U.S. trade deficits with Canada, exceeding $100 billion, often driven by U.S. reliance on crude oil. However, the U.S. does have an energy trade surplus with Mexico, which welcomes U.S. exports of natural gas, gasoline and diesel, according to data from the U.S. Energy Information Administration.
The U.S. runs a trade deficit in the automotive sector with Canada and Mexico, importing roughly $128 billion in autos and auto parts annually while exporting $81 billion. Mr. Trump slapped a 25% tariff on Canadian and Mexican auto parts last year to reduce the trade deficit.
The U.S. is currently holding formal negotiations only with Mexico, giving Canada the cold shoulder over a list of trade disputes, such as Ottawa’s restrictions on the import of U.S. dairy products into its provinces and the removal of 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 Intergovernmental Affairs Minister Dominic LeBlanc.
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