U.S. declaration to exit USMCA to start a decade-long countdown for the pact
By David Lawder
WASHINGTON, June 30 (Reuters) – U.S. President Donald Trump’s administration is expected to formally announce on Wednesday that it will not extend the U.S.-Mexico-Canada trade agreement, kicking off a decade-long window to end the 32-year-old North American free trade area as the three countries bargain over proposed changes.
The declaration would kick off a six-year review session that was part of the “sunset clause” negotiated by President Donald Trump’s first administration. However, it will do little to change contentious negotiations over the agreement’s future, which include sweeping demands for increased U.S. and regional content in North American automotive production and trade protections to prevent Chinese goods from benefiting from the USMCA.
Trade chiefs from the US, Mexico and Canada are expected to meet virtually on Wednesday and announce whether they want to extend the agreement for another 16 years. U.S. Trade Representative Jamieson Greer scheduled a third round of talks with Mexico for the week of July 20, signaling his intention to continue pressing for changes.
“We expect July 1 will come and go and the United States will not confirm its willingness to extend,” said Greta Peisch, former general counsel for USTR and now a trading partner at Wiley Rein in Washington.
Peisch added in an expected statement after the meeting that it was unclear “whether the United States has said publicly exactly what it is looking for.”
Failure to reach agreement on revisions to the USMCA will keep the trade agreement in limbo, with similar review sessions held annually for the next 10 years, after which the North American trade agreement will expire on July 1, 2036.
The review and termination process, which was considered controversial once enacted, is separate from a termination clause that US President Donald Trump or his Mexican and Canadian counterparts could implement, which could trigger a US withdrawal from the agreement within six months.
Trump, whose first administration negotiated the USMCA to replace the 1994 North American Free Trade Agreement, hailed its launch in 2020 as “the fairest, most balanced and beneficial trade agreement we have ever signed.”
But he quickly soured on the USMCA as the U.S. goods trade deficit with Mexico widened; This was partly because companies moved their supply chains away from China after he imposed high tariffs on Chinese goods. Trump often says he doesn’t want to renew the USMCA, opting instead for higher tariffs on Mexican and Canadian autos, steel and aluminum.
