Washington: The United States has decided not to renew the United States-Mexico-Canada Agreement (USMCA) in its current form, marking a significant development for North American trade and ending the prospect of an automatic 16-year extension of the landmark agreement.
A senior US official said the administration deliberately chose not to approve the renewal until key trade concerns were resolved. The decision does not immediately terminate the trade pact, which remains in force. However, it introduces fresh uncertainty for businesses and investors across North America by preventing the agreement from being automatically extended until 2042.
Under the terms of the USMCA, all three member countries, the United States, Mexico and Canada must unanimously agree to renew the agreement for another 16-year term. Without unanimous approval, the countries will now be required to hold annual review meetings while a 10-year countdown begins, meaning the agreement could expire as early as 2036 if no consensus is reached.
The US administration is seeking substantial revisions before committing to a long-term extension. Among Washington’s primary concerns are stricter automotive rules of origin, improved access to Canada’s dairy market, and stronger safeguards to prevent countries such as China from indirectly benefiting from the regional trade framework.
The USMCA governs approximately $2 trillion in annual trade across North America, making it one of the world’s largest regional trade agreements. Business organisations have warned that uncertainty surrounding the pact could affect investment decisions and disrupt industries heavily dependent on cross-border supply chains.
The US Chamber of Commerce had urged the three governments to renew the agreement, warning that sectors including manufacturing and agriculture rely on long-term trade stability and predictable market access.
However, several domestic US industry groups welcomed the administration’s decision. The American Iron and Steel Institute and the Steel Manufacturers Association argued that annual reviews would strengthen the United States’ negotiating position and create opportunities to address provisions they believe disadvantage American industries.
The USMCA entered into force in 2020, replacing the North American Free Trade Agreement, which had governed regional trade since 1994. The updated agreement introduced modern rules covering digital commerce, labour protections and regional manufacturing requirements, including stricter content rules designed to ensure more automotive production takes place within North America.
The US decision signals the beginning of a new phase of negotiations that could reshape the future of North American trade while leaving businesses to navigate increased policy uncertainty in the years ahead.
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