The Trump administration has decided not to extend the trade agreement with Canada and Mexico, setting the stage for challenging negotiations to amend the deal. The announcement came after a virtual meeting between U.S. Trade Representative Jamieson Greer, Canada-U.S. Trade Minister Dominic LeBlanc, and Mexico’s economy secretary, Marcelo Ebrard.
Although the U.S. decision does not terminate the Canada-U.S.-Mexico Agreement (CUSMA) immediately, it triggers a process for potential renegotiation as the agreement does not expire until 2036. Each country had until Wednesday to declare whether they wanted to extend the agreement to 2042 or revise its terms.
While the U.S. move was expected, it was officially confirmed recently. Mexico and Canada had expressed their desire for an extension of CUSMA and were open to discussions on possible amendments.
President Trump had previously praised the agreement as historic but has more recently criticized it without threatening to end it. Any country can withdraw from the deal, known as USMCA in the U.S., with a six-month notice period.
Greer stated that the U.S. did not agree to renew USMCA in its current form and emphasized the intention to engage with Mexico and Canada to address trade deficits and shortcomings within the agreement. A senior official from the Trump administration mentioned that the president retains the right to withdraw from the agreement.
Canada highlighted the importance of ongoing discussions, particularly focusing on sectoral tariffs on Canadian steel, aluminum, autos, and lumber. Mexico downplayed the significance of the deadline, indicating that an extension could be agreed upon at any time in the next decade.
As negotiations continue, the trade relationship between the three countries has shown growth since CUSMA replaced NAFTA, with the trade value exceeding $1.9 trillion annually. The U.S. trade deficit, a major concern for Trump, played a key role in the decision not to extend the agreement, as it did not address the deficit as intended.
CUSMA holds significance for the Canadian economy, exempting nearly 90% of Canada’s exports to the U.S. from tariffs imposed by Trump. Canada seeks relief from tariffs on steel, aluminum, autos, and softwood lumber, emphasizing the need for adjustments while acknowledging U.S. national security interests.
Negotiations are ongoing, with Mexico scheduling a third official round of talks with the U.S. in July. The next meeting between Canadian and U.S. negotiating teams is yet to be determined.