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The Trump administration announced on Wednesday that it will not renew the USMCA —the major trade agreement linking the United States, Mexico, and Canada— in its current format, just as the mandatory six-year review period for the agreement was set to expire.
The decision was conveyed through a brief statement of just 150 words issued by the Office of the United States Trade Representative (USTR), led by Jamieson Greer: "The U.S. has not agreed to renew the USMCA in its current form. Consequently, the USMCA will not be renewed."
Why does Trump refuse to renew it?
Washington's refusal has a central cause that Trump has stated unequivocally: he believes that the agreement benefits his neighbors more than it does the United States.
"I am not looking to renew it. We do not need anything that Canada has. We do not need anything that Mexico has, but they need everything that we have. They have to treat us better," the president declared last month.
The underlying issue is the trade deficit: The United States recorded an imbalance of approximately 182 billion dollars with Mexico in 2025, a figure that the White House presents as evidence of an unfair deal.
Analysts see the annual review strategy as a constant leverage point. Former ambassador Arturo Sarukhan hinted at this on June 30: “The decision by the US not to 'extend' the USMCA is a move by the Trump Administration, as it is a way to maintain its leverage over Canada and Mexico.”
What does it mean in practice?
The decision does not involve the cancellation of the treaty. The USMCA will remain in effect until 2036, its original 16-year term, but instead of being extended for another 16 years—as requested by Mexico and Canada—it will enter an annual review mechanism.
The Secretary of Economy of Mexico, Marcelo Ebrard, was clear after the trilateral virtual meeting: "The United States is not in a position to extend it for another 16 years. We will proceed with the annual review process for the next 10 years, which is the duration of the treaty."
Ebrard also dismissed the idea that any of the three countries intends to withdraw from the agreement, noting that any withdrawal requires a written notice six months in advance.
The cost of uncertainty
Although the USMCA is not disappearing, the lack of certainty is already taking its toll. The Mexican automotive sector has lost 100,000 jobs since 2025 as a direct consequence of trade instability.
In Canada, business investment has been declining for five consecutive quarters and hiring remains stagnant. The trade agreement facilitates approximately two trillion dollars in annual trade between the three countries.
Different treatment for Mexico and Canada
The negotiations are not progressing at the same pace with the two neighbors. U.S. officials acknowledged that Mexico "has been very constructive" and has presented concrete proposals to reduce the deficit, while Canada is facing more obstacles.
"Canada is in a different position. Alongside China, it was one of the few countries in the world that responded to the United States" with tariff countermeasures, noted a senior official from the Department of Commerce.
The Mexican president, Claudia Sheinbaum, defended the value of the pact: "The treaty benefits the United States because it lowers product prices. As North America, the three countries together can compete better against other regions of the world."
Can Trump completely break the agreement?
Technically yes, but with significant obstacles. The Senate Finance Committee warned in 2020 that the United States cannot withdraw from an agreement approved by Congress without its consent, which would open the door to legal challenges.
Michael Pearce, chief economist for the United States at Oxford Economics, believes there is "only a small likelihood" that Trump will invoke the exit clause, given "the prohibitively high costs this would impose on investment and trade in the United States, particularly in key battleground states in the Midwest."
The next meeting is scheduled for the week of July 20 in Mexico City, where the third round of bilateral negotiations will take place. Ebrard summarized his government's position: "We are not in a hurry, but we are also not interested in uncertainties."
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