US Declines to Renew USMCA, Initiating 10-Year Phase-Out

Key facts

• The U.S. has declined to renew the USMCA trade agreement.
• This action starts a 10-year period before the agreement expires.
• The administration aims to reshore manufacturing and decrease trade deficits with North American neighbors.
• US Trade Representative Jamieson Greer confirmed the non-renewal.
• Bilateral talks with Mexico are set for July 20 to discuss rules of origin and economic security.
• Mexico and Canada are open to discussions but have differing views on automotive rules.

The Trump administration announced on Wednesday that it would not seek to renew the USMCA trade agreement, initiating a 10-year period before the deal expires. This decision, widely expected, aims to reshore manufacturing jobs and reduce U.S. trade deficits with Mexico and Canada.

U.S. Trade Representative Jamieson Greer stated that the agreement is not renewed in its current form and that the U.S. will continue engaging with Mexico and Canada to address its shortcomings. Bilateral negotiations with Mexico are scheduled for the week of July 20, focusing on strengthening North American rules of origin for autos and industrial goods, as well as economic security.

Mexican Economy Minister Marcelo Ebrard indicated Mexico's willingness to address U.S. concerns but highlighted ongoing disagreements over stricter regional automotive rules of origin, emphasizing the need to protect Mexico's auto industry. Canadian Minister Dominic LeBlanc noted Canada's continued efforts to address U.S. tariffs on steel, aluminum, autos, and lumber.

The USMCA, negotiated by the Trump administration to replace the 1994 North American Free Trade Agreement, underpins a highly integrated regional economy with approximately $1.6 trillion in annual trilateral trade. The decision to not renew was anticipated due to persistent U.S. goods trade deficits with Mexico and Canada, which reached $197 billion and $48.3 billion respectively in 2025. The deficit with Mexico has grown as supply chains shifted from China, while the deficit with Canada is largely attributed to oil imports.