The Trump administration is expected to officially announce on Wednesday that it will not renew the U.S.-Mexico-Canada Agreement on trade, beginning a ten-year countdown to phase out the 32-year-old North American free trade zone as the three countries negotiate over proposed changes.
That declaration will initiate a six-year review period, part of a “sunset clause” negotiated by President Trump’s first administration. However, it will have little impact on contentious negotiations over the pact’s future, including extensive demands to increase U.S. and regional content in North American automotive production and trade protections to prevent Chinese goods from benefiting from USMCA.
Trade leaders from the U.S., Mexico, and Canada are set to meet virtually on Wednesday to decide on extending the pact for another 16 years. U.S. Trade Representative Jamieson Greer has already arranged a third negotiation round with Mexico for the week of July 20, indicating his commitment to negotiating further changes.
The review and sunset process, initially seen as controversial when introduced, is distinct from a termination clause that either U.S. President Donald Trump or his Mexican and Canadian counterparts can activate, leading to a U.S. withdrawal from the agreement within six months.
If the parties cannot agree on revisions to the USMCA, the trade agreement will remain in indefinite limbo, involving yearly review sessions for the next decade, before the agreement expires on July 1, 2036.
Trump praised the agreement in 2020 as “the fairest, most balanced, and beneficial trade agreement we have ever signed into law.”
By CEO NA Editorial Staff
