A countdown to the expiry of the U.S.-Mexico-Canada Agreement is set to begin, as officials launch a review of the sweeping trade deal that President Donald Trump signed during his first term.
The USMCA entered into force six years ago and is the architecture underpinning almost $2 trillion in annual trade among the three countries. It covers everything from Mexican steel to Canadian milk — an extensive rulebook governing auto manufacturing, investor protections, intellectual property rights, digital services and more.
But it also has a ticking clock. Unlike the North American Free Trade Agreement which preceded it, USMCA includes a provision for the three countries to talk about renewal of the deal, starting this year. Unless it’s reauthorized — with or without changes — it would expire in 2036.
While Mexico and Canada both want to keep USMCA broadly the way it is, Trump appears ready to use the moment as leverage. So U.S. Trade Representative Jamieson Greer, Mexican Economy Minister Marcelo Ebrard and Canadian cabinet minister Dominic LeBlanc are expected to meet virtually on the morning of July 1, officially starting the mandatory review. They’ll update the public on the process later.
In 2020, Trump hailed USMCA as “the largest, fairest, most balanced, and modern trade agreement ever achieved,” forming a partnership “against the world.” But through the pandemic and a U.S. trade war with China, which boosted the urgency for supply-chain resilience and independence, his warm regard for it has since gone cold.
Economists, analysts and policymakers believe that months, perhaps years, of haggling lie ahead to try to negotiate solutions to frictions in a trading bloc of more than 500 million people.
“I wouldn’t expect any drama tomorrow,” Canadian Prime Minister Mark Carney said on June 30, adding: “I’m not looking for my pen.”
Mexican President Claudia Sheinbaum said on June 30 that the aim is to publish a joint statement from all three nations, but otherwise the countries will each release their own.
The statement “will be very important,” she said. “The treaty benefits all three countries.”
Sheinbaum said she’s already signed a letter calling for the treaty to be renewed, as laid out in the text of the agreement, for 16 years. LeBlanc has done the same on behalf of Canada.
Non-renewal sets up a process of annual check-ins. At any of these, a new deal could be reached, or the process itself could be altered. Parties also have the more radical option to exit the deal with six months’ notice. Trump has recently toyed with that idea.
“I would rather leave it unsigned, I’d rather have it terminated,” he said in June, mentioning two distinct options. “I would rather not have the USMCA,” he continued. “I would rather not have the agreement, but I may sign it.”
Trump’s non-committal approach creates uncertainty about one of the world’s largest trading blocs, where industrial giants ranging from Airbus SE to Nissan Motor Co. make their products. That lack of clarity means a drag on confidence and investment across the continent, with bigger costs for Canada and Mexico, according to Oxford Economics.
‘Slim Chance’
“There’s only a slim chance” Trump would actually trigger the exit clause given the costs it would impose on U.S. investment and trade, especially in Midwest swing states, independent economic advisory firm Oxford Economics argued in a research note published on June 30.
“We no longer expect a widespread rollback of tariffs,” with only “small-scale agreements to pare back sectoral tariffs” seen as possible, said Michael Pearce, chief U.S. economist at Oxford Economics. Mexico “appears the most exposed, but its exports have held up” and “Canada is attempting to diversify its export markets, but that will take time,” according to Oxford.
Mexico sends 80% of its exports to the U.S. and has made it clear its goal is to get preferential tariff treatment compared with other nations, or to avoid tariffs altogether. The country has already held two bilateral rounds of talks with the U.S., with a third round scheduled for late July.
Around 70% of Canada’s goods exports go to the U.S., including millions of barrels of oil every day. Talks between Canada and the U.S. over tariff relief reached an advanced stage in October 2025, but Trump terminated the negotiations after the province of Ontario ran a TV commercial in the U.S. quoting former President Ronald Reagan speaking against tariffs.
The U.S. has published lists of the irritants it hopes to persuade its neighbors to remedy.
In Canada, for example, some provincial liquor agencies banned the sale of U.S. alcohol last year in retaliation for Trump’s barrage of tariffs. The U.S. wants those booze restrictions lifted.
In Mexico, the U.S. is concerned with the government favoring state-owned Petroleos Mexicanos and limiting private companies’ participation in the energy sector, as well as the enforcement of labor law.
U.S. Content
The White House is also looking for stronger rules of origin, to guard against transshipment of manufacturing parts from outside the continent, especially from China, in the automotive sector. The U.S. side believes the USMCA’s terms should be changed to require more American-made content in cars and trucks, for example.
Although USMCA allows most food products to move free of tariffs, dairy products traded between the U.S. and Canada are an exception. Canada restricts the amount of U.S. milk, eggs and poultry that can be imported without tariffs, and the U.S. also has protections against Canadian dairy. The Canadian system is a bugbear for U.S. farmers and politicians, and Trump has railed against it frequently, but it’s protected because of the political influence of Quebec’s dairy industry.
Ex-diplomats for Canada and Mexico expressed cautious optimism that some new kind of deal will be reached, in a conversation with David Westin on Bloomberg’s Wall Street Week.
For now, USMCA is also a crucial shield for Mexico and Canada, exempting many of their goods from the broad import taxes that Trump has imposed against almost all other U.S. trading partners.
