USMCA Renewal Shelved by US, Annual Reviews Planned Instead

The United States has decided against a formal renewal of the US Mexico Canada Agreement (USMCA), choosing annual reviews over a fixed extension of the pact that governs roughly $1.6 trillion in trilateral trade. The move signals Washington wants leverage to reopen terms rather than lock in the status quo for another decade.

Key Takeaways

• USMCA remains in force for up to ten years unless one country withdraws, with annual reviews replacing an automatic 16 year extension option.
• If no new agreement emerges, the pact is set to lapse in 2036.
• The decision was announced July 1, 2026, the sixth anniversary of the agreement taking effect.
• Trilateral trade climbed to more than $1.6 trillion in 2024, up from about $1 trillion when USMCA started in 2020.
• The US, Canada and Mexico combined represent nearly a third of global GDP.

Why Washington Passed on a Clean Renewal

US Trade Representative Jamieson Greer told Bloomberg the administration sees "substantial issues" with the current framework and is "not prepared to rubber stamp the agreement." That stance marks a reversal for President Trump, who put his signature on the original USMCA in 2020. The administration points to persistent trade deficits with Mexico and Canada, plus USMCA provisions that limit the tariffs Trump has pushed to impose, as the core reasons for reopening talks rather than extending the deal outright.

Roughly 90% of goods imported from Canada and Mexico now qualify as USMCA compliant, and that participation rate rose last year as new tariffs gave companies more reason to file the paperwork needed to claim preferential treatment.

Where the Three Countries Stand Apart

Mexico and the US are furthest along. A third round of talks is scheduled for the week of July 20, with discussions expected to expand beyond automotive rules of origin into aerospace, intellectual property and water quality, according to a senior administration official.

Canada has largely been sidelined from those formal sessions. Dominic LeBlanc, Canada's minister responsible for US trade, said officials agreed to keep talking and to find ways trade and investment frameworks can keep supporting "North American prosperity and competitiveness," adding that Canada wants substantive discussion of sectoral tariffs on steel, aluminum, autos and lumber. The friction reflects a broader rift between Trump and Canadian Prime Minister Mark Carney, who has pushed to diversify Canada's trade away from US dependence.

Unresolved Tariff Disputes

• Separate US duties on autos remain outstanding and are expected to surface in future rounds.
• Metals tariffs, including steel and aluminum, are still unresolved between the US and Canada.
• Lumber duties remain a specific sticking point raised by LeBlanc.

What Happens if the Reviews Stall

The annual review structure gives each government a recurring checkpoint to press for changes rather than committing to fixed terms through the 2030s. That keeps the tariff provisions Trump has objected to squarely on the table every year. If Mexico, Canada and the US cannot converge on revised terms through that process, the agreement's current design points toward expiration in 2036, an outcome that would upend a trade relationship covering close to a third of world economic output. Whether the Mexico track produces a template Canada can eventually join, or whether Ottawa remains on a separate and slower path, will shape how much certainty businesses on both sides of the border get in the years ahead.