The United States has declined to renew its North American trade agreement with Canada and Mexico in its current form, triggering a review process that could reshape one of the world’s largest free trade zones.
The decision launches a 10-year countdown before the United States-Mexico-Canada Agreement (USMCA) expires, unless all three countries agree to revised terms. Washington says it wants tougher rules aimed at bringing more manufacturing back to the US and reducing trade deficits with its neighbours.
“The United States did not agree to renew the USMCA in its current form,” US Trade Representative Jamieson Greer said. “As a result, the USMCA is not renewed. The United States will continue to engage with Mexico and Canada to address the agreement’s shortcomings and our trade deficits with these countries.”
The announcement followed the agreement’s first six-year review. Under the deal’s sunset clause, the pact remains in force for another decade while annual reviews take place, giving the three countries time to negotiate possible amendments.
Greer said the next round of bilateral negotiations with Mexico would begin during the week of 20 July. Discussions are expected to focus on strengthening regional rules of origin for vehicles and other manufactured goods, while limiting access for countries such as China to North American supply chains.
Mexican Economy Minister Marcelo Ebrard said Mexico remained committed to resolving outstanding issues, although differences persist over Washington’s demand for stricter automotive content requirements.
“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 added that protecting Mexico’s automotive industry remained the central issue in negotiations. “We wouldn’t allow our (auto) industry to be at a disadvantage, I’d say that has been the main point of discussion with the United States in all these talks: protecting our automotive industry.”
Canada also signalled its willingness to continue negotiations.
Canadian trade minister Dominic LeBlanc said the three countries had agreed to continue discussions to preserve North America’s competitiveness, while also seeking solutions to US tariffs on Canadian steel, aluminium, vehicles and lumber.
The USMCA replaced the North American Free Trade Agreement (NAFTA) in 2020 after being negotiated during President Donald Trump’s first term. It supports about $1.6tn in annual trade between the three countries.
US officials argue that the agreement has failed to curb widening trade deficits, which reached $197bn with Mexico and $48.3bn with Canada in 2025. Much of the Canadian deficit is linked to energy imports, while the gap with Mexico has widened as manufacturers shifted production away from China.
The Trump administration has already altered the trading relationship by imposing tariffs on imported vehicles, metals and lumber, while pushing for vehicles produced within North America to contain significantly more US-made components.
Industry groups have warned that tougher requirements could increase manufacturing costs and raise vehicle prices.
Nissan chief executive Ivan Espinosa said requiring substantially higher US content could worsen affordability for consumers because many components cannot currently be sourced domestically. “You cannot build all the parts in the US The supply chain is not set up to do that, We need something that is actually executable.”
Agricultural groups have also urged the three governments to preserve the agreement, noting that Canada and Mexico together account for more than one-third of US farm exports.
Bryan Goodman, spokesperson for the Agricultural Coalition for USMCA, said the agreement remained vital for American farmers and rural communities.
“USMCA is without a doubt critical to the livelihood of farmers, fishers and rural communities across the country who rely on exports to Mexico and Canada, adding that the coalition hoped negotiations would produce “a renewed and strengthened agreement.”
Erizia Rubyjeana
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