U.S. says it won’t extend key trade deal with Canada and Mexico

The Office of the United States Trade Representative has announced that the U.S. will not be extending the United States-Mexico-Canada Agreement (USMCA) with Canada and Mexico. This decision comes after the July 1 deadline for the three countries to decide on an extension until 2042. The USMCA will remain in effect and subject to annual reviews for the next 10 years, expiring in 2036 unless a new agreement is reached.

U.S. Trade Representative, Jamieson Greer, stated that the U.S. will continue to engage with Mexico and Canada to address the agreement’s shortcomings and trade deficits with these countries. The USMCA, signed into law by President Trump in 2020, aimed to lower trade barriers and create jobs for American workers. However, it has not succeeded in reducing the U.S. trade deficit with Canada and Mexico, which was nearly $197 billion and over $46 billion respectively in 2025.

Negotiations are set to continue with Mexico, focusing on rules of origin, intellectual property, and labor compliance. Talks with Canada are also expected to resume in the future. The Trump administration may consider withdrawing from the USMCA before it expires, depending on the outcome of negotiations. Trade experts anticipate that talks could take years to reach a resolution.

If the U.S. were to withdraw from the USMCA, the impact would depend on whether new bilateral trade agreements are established. Economists suggest that growth could slow in Canada and Mexico without the tariff exemption provided by the USMCA. However, the average tariff rate would only rise to 10%, potentially preventing recessions.

In conclusion, the future of the USMCA remains uncertain as negotiations continue between the U.S., Mexico, and Canada. The trade agreement’s effectiveness in addressing trade deficits and promoting economic growth will be closely monitored in the coming years.