The United States has announced it will not renew the United States-Mexico-Canada Agreement (USMCA) in its current form, raising fresh uncertainty over the future of one of the world’s largest free trade agreements covering about $1.6 trillion in annual trade.
The announcement came just one day before the trade pact was due for its first mandatory joint review.
In a statement on Wednesday, U.S. Trade Representative Jamieson Greer said Washington would not approve the trilateral agreement without significant changes. “The United States will continue to engage with Mexico and Canada to address the agreement’s shortcomings and our trade deficits with these countries. However, the agreement remains in force pending resolution of these issues or until its termination,” the statement said.
The U.S. also confirmed it will hold a third round of bilateral negotiations with Mexico during the week of July 20 as discussions continue.
President Donald Trump has repeatedly criticised the USMCA, arguing that it offers little benefit to the United States.
Earlier this year, Trump described the agreement as having “no real advantage,” and recently suggested he was unlikely to renew it. He maintained, however, that his administration remains open to negotiations with both Canada and Mexico.
The USMCA took effect on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA). It was negotiated during Trump’s first term and introduced updated rules on digital trade, anti-corruption measures, regulatory practices and support for small and medium-sized businesses.
The agreement also includes a “sunset clause,” requiring a review every six years. Since the U.S. has declined to renew the pact at this stage, negotiations will continue. Without a revised agreement, the USMCA is set to expire on July 1, 2036.
The Trump administration argues that the agreement has failed to reduce America’s trade deficits with its neighbours.
In 2025, the U.S. recorded a goods trade deficit of $197 billion with Mexico and $48.3 billion with Canada. Officials say the imbalance with Canada is largely driven by crude oil imports, while the deficit with Mexico has widened as manufacturers shifted production from China to Mexico following U.S. tariffs on Chinese goods.
Despite existing tariffs on automobiles, steel, aluminium and lumber imports from Canada and Mexico, Trump has continued to express doubts about the long-term value of the agreement.
Both Canada and Mexico have responded by expressing willingness to continue negotiations.
Mexican Economy Minister Marcelo Ebrard said the differences between the three countries are manageable and stressed the need to protect Mexico’s automotive industry during the talks.
Meanwhile, Canadian Trade Minister Dominic LeBlanc said all parties had agreed to continue discussions aimed at preserving trade and investment that support North America’s competitiveness.
Although the U.S. has refused to renew the agreement in its current form, the USMCA remains in effect while negotiations continue.
Trade experts believe businesses can expect continuity for now, but warn that prolonged negotiations and the possibility of additional tariffs could create uncertainty. Analysts also suggest bilateral agreements between the U.S. and its neighbours may become more prominent if efforts to update the trilateral pact fail.
