Trump administration expected to withhold USMCA extension

The Trump administration is expected to formally notify its North American trading partners tomorrow that the United States will not extend the U.S.-Mexico-Canada Agreement, a procedural move that would begin a lengthy review process rather than immediately end the trade pact, according to Reuters.

The expected declaration would activate the agreement’s six-year “sunset clause,” requiring the United States, Mexico, and Canada to negotiate the future of the trade deal. If the three countries cannot agree on an extension, the agreement would remain in force while undergoing annual reviews through 2036, when it would expire unless an agreement is reached.

Reuters reported that trade officials from the three countries are expected to meet virtually Wednesday to discuss whether to extend the agreement for another 16 years. The Trump administration has previously indicated it intends to pursue significant revisions rather than simply renew the pact.

Among the issues expected to dominate negotiations are tougher North American content requirements for automobiles and stronger trade protections aimed at preventing Chinese goods from entering the region through USMCA preferences, according to Reuters.

U.S. Trade Representative Jamieson Greer has already scheduled a third round of negotiations with Mexico for the week of July 20, signaling the administration’s intent to continue pushing for changes to the agreement, Reuters reported.

Greta Peisch, a former general counsel for the Office of the U.S. Trade Representative who is now a trade partner at Wiley Rein, told Reuters, “We expect July 1st to come and go, and for the United States to not confirm its wish to extend.”

The USMCA replaced the North American Free Trade Agreement in 2020 after being negotiated during President Donald Trump’s first term. Unlike NAFTA, the agreement includes a built-in review mechanism requiring the three countries to evaluate whether to extend the pact every six years.

While the anticipated U.S. declaration may heighten uncertainty for businesses that rely on cross-border trade, experts note it does not immediately withdraw the United States from the agreement. Instead, it begins a negotiation period that could last up to a decade while the three countries seek consensus on updates to the pact.

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