USMCA is not ending now. The countdown may start anyway
USMCA is not ending this week, but the future of the U.S.-Mexico-Canada trade pact is getting less certain.
Reuters reported that President Donald Trump’s administration is expected to declare Wednesday that it will not extend the agreement, starting a decade-long countdown that could eventually end the pact.
The declaration would not kill USMCA now. Instead, it would trigger a review process under the agreement’s sunset clause. If the United States, Mexico and Canada do not agree on changes, the pact would expire July 1, 2036.
The stakes are high for all three countries.
The Associated Press reported that the United States trades about $1.9 trillion a year in goods and services with Canada and Mexico, or about $5 billion a day. The two countries have also replaced China as America’s top trading partners.
Businesses are looking for stability after months of shifting tariffs. Many U.S., Canadian and Mexican companies want clearer rules after Trump imposed tariffs on Mexican and Canadian goods, then later exempted products that qualify for USMCA treatment, AP reported.
The biggest fight is over cars.
The United States wants stricter rules for North American auto production, including a requirement that North American-built vehicles contain 50% U.S.-specific content.
Oscar Ocampo, director of economic development at the Mexican Institute for Competitiveness, told AP the proposal is a red line for both Canada and Mexico. The current agreement requires automotive products to be 75% made in North America to qualify for duty-free treatment, but no country is guaranteed a specific share of production.
Analysts told AP the proposed change could disrupt established supply chains and raise prices on some vehicles. Marcos Carias, an economist at Coface, estimated prices could rise 5% to 7% on some of the most affected models.
Trade officials from all three countries are expected to meet virtually on Wednesday.
Reuters reported that Canadian Prime Minister Mark Carney said he expects a “constructive exchange,” but no agreements to sign.
“The priority is to get a new deal,” Carney said. “We’re ready to negotiate an improvement of this agreement.”
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Ella Rae Greene, Editor In Chief
