The United States has declined to extend the U.S.-Mexico-Canada Agreement (USMCA) during its mandatory six-year review, launching a 10-year countdown that could ultimately bring an end to the agreement unless the three countries agree to significant revisions.
The move, announced Wednesday by the Trump administration, does not immediately terminate the agreement. Instead, it activates the treaty's "sunset clause," requiring annual reviews until 2036 unless the United States, Mexico, and Canada reach a consensus on extending the pact for another 16 years.
The decision injects fresh uncertainty into one of the world's largest trading blocs, which governs nearly $2 trillion in annual trade among the three nations. U.S. Trade Representative Jamieson Greer said Washington chose not to renew the agreement in its current form because it believes the deal has failed to sufficiently reduce U.S. trade deficits or strengthen domestic manufacturing.
"We're not going to rubber stamp an extension," Greer said, arguing that the review process offers an opportunity to negotiate changes that better reflect the administration's economic priorities.
The USMCA, which replaced the North American Free Trade Agreement (NAFTA) in 2020 after being negotiated during President Donald Trump's first term, included a unique sunset provision requiring a formal review after six years. Had all three governments agreed, the pact would have automatically been extended for another 16 years.
Instead, the U.S. decision means the agreement will now face annual reviews while remaining in force through 2036 unless a replacement or revised deal is reached. Administration officials have indicated that Washington wants tougher rules governing automotive manufacturing, including higher U.S. content requirements, along with stricter limits preventing Chinese companies from using Mexico or Canada as backdoors into the American market.
Officials also want to address longstanding disputes involving agriculture, energy and market access. Rather than immediately pursuing trilateral negotiations, the administration plans to begin with bilateral discussions, particularly with Mexico, focusing on industrial rules of origin, supply chains and economic security.
Canada has expressed concern that separate negotiations could sideline its interests as trade tensions between Ottawa and Washington continue over tariffs and other disputes. Mexican President Claudia Sheinbaum sought to reassure businesses that the agreement remains intact despite the U.S. announcement.
She said the treaty can still be renewed at any point during the next decade if the three governments reach an agreement on revisions. Canada also reaffirmed its commitment to maintaining a trilateral agreement while expressing willingness to negotiate improvements.
Business groups have warned that the prolonged uncertainty could discourage investment throughout North America. Manufacturers have increasingly shifted production and expanded regional supply chains since the agreement took effect in 2020, benefiting from predictable tariff-free trade rules.
Annual negotiations could complicate long-term investment decisions as companies weigh future regulatory and trade risks. The administration's decision also represents a notable shift for Trump, who previously celebrated the USMCA as a signature trade achievement after replacing NAFTA during his first term.
Since returning to office, however, Trump has argued that changing global trade dynamics, persistent deficits, and concerns about Chinese manufacturing require another overhaul of North American trade rules. The administration has already imposed tariffs on imports, including automobiles, steel, and aluminum from Canada and Mexico, while pressing for broader changes to the regional trading relationship.
