The United States has decided not to extend the United States-Mexico-Canada Agreement (USMCA) beyond its current term. This decision was announced by the Office of the United States Trade Representative. The deadline for the extension was July 1. The USMCA will remain active and subject to annual reviews for 10 years, expiring in 2036 unless another agreement happens.
U.S. Trade Representative Jamieson Greer stated, “The United States will continue discussions with Mexico and Canada to address shortcomings in the agreement and address our trade deficits with these nations.” Greer emphasized that the agreement remains in force pending these resolutions or until it terminates.
Implemented in 2020, the USMCA replaced the North American Free Trade Agreement from 1994. Initially praised by President Trump, his stance has changed recently. In June, he mentioned that the U.S. might benefit more without the agreement.
Further negotiations are scheduled with Mexico during the week of July 20. These discussions will focus on bilateral relations.
Trade experts indicate that a potential U.S. withdrawal could hinge on new bilateral agreements replacing the USMCA. “Without such deals, the tariff exemption would end, slowing growth in Canada and Mexico,” noted economists from Capital Economics. They clarified that without the USMCA, average tariff rates could rise to 10% but not reach the heightened levels previously suggested under the International Emergency Economic Powers Act (IEEPA). Thus, major economic downturns might be avoided.
Stay tuned for further updates on this evolving situation.