The administration of U.S. President Donald Trump is anticipated to officially announce on Wednesday that it will not extend the United States-Mexico-Canada Agreement (USMCA). This decision initiates a ten-year countdown to phase out the 32-year-old North American free trade zone amid ongoing talks over proposed modifications.
Under a “sunset clause” negotiated during Trump’s first term, this move will activate a six-year review mechanism. Trade representatives from the U.S., Mexico, and Canada are scheduled to meet virtually on Wednesday to decide whether to prolong the pact for an additional 16 years.
While U.S. Trade Representative Jamieson Greer has yet to make a formal public statement, he has arranged a third round of bilateral negotiations with Mexico for the week of July 20. Meanwhile, Mexican President Claudia Sheinbaum confirmed she signed a letter advocating for a 16-year extension of the agreement. Canadian Prime Minister Mark Carney expressed optimism for constructive discussions, emphasizing Canada’s readiness to negotiate improvements to the deal.
In a significant development, President Trump has already unilaterally altered the agreement by imposing 25% tariffs on Canadian and Mexican automobiles and parts, along with 50% tariffs on steel and aluminum imports from both countries. Although Canada has not joined formal negotiation sessions, technical talks concerning steel, aluminum, autos, and softwood lumber have continued.
Currently, Washington is conducting formal negotiations solely with Mexico, sidelining Canada due to ongoing bilateral trade disputes, including issues over Canada’s restricted dairy market and provincial policies on American liquor sales.
In talks with Mexico, U.S. officials have demanded that vehicles built in North America contain 50% U.S.-specific content, which would raise the total regional content requirement to 82% for vehicles to qualify for tariff benefits. Discussions have also included a potential 15% universal global tariff on vehicles, with lower rates for regional partners agreeing to stricter origin rules.
If the three countries fail to reach an agreement on these revisions, the trade pact will enter annual review sessions for the next decade until its ultimate expiration on July 1, 2036. This sunset review process is separate from a termination clause that allows any member country to withdraw with six months’ notice.
North American vehicle manufacturers have urged a swift resolution to protect supply chains. Matt Blunt, president of the American Automotive Policy Council representing Ford, General Motors, and Stellantis, called on officials to preserve the trilateral agreement to ensure regional economic integration and investment certainty.
