The Liberty Daily 
(The Epoch Times)—The United States has chosen not to renew its trade agreement with Canada and Mexico, senior administration officials confirmed on July 1.
“In accordance with the Agreement, the United States, Mexico, and Canada met virtually today to discuss the operation of the USMCA,” U.S. Representative Jamieson Greer said in a statement, referring to the United States–Mexico–Canada Agreement.
“The United States did not agree to renew the USMCA in its current form. As a result, the USMCA is not renewed.”
July 1 marked a pivotal date for the USMCA. Under the pact’s six‑year joint review, negotiators must decide whether to extend the deal through 2042 or decline to do so—a move that would automatically reopen the agreement and trigger a fresh round of negotiations each year for the next decade.
As all three countries engage in annual reviews moving forward, provisions inside the USMCA will remain in effect until 2036, the White House told reporters on a conference call.
“The USMCA did not operate to control the deficit as the president intended,” the senior administration official said. “So that’s really the heart of it, and part of it also extends to market access opportunities in Canada and Mexico.”
Six years after the agreement took effect, President Donald Trump signaled last month that he would abandon the USMCA, telling reporters he would “rather not have” the deal, negotiated during his first term, that replaced the North American Free Trade Agreement (NAFTA).
“I’m not looking to renew it,” Trump told reporters. “I made the deal, and the primary reason I made the deal is that NAFTA was the worst trade deal I’ve ever seen. And I made it better.”
He pointed out that the USMCA allows him to terminate the deal, whereas NAFTA did not.
At the time, the president noted that he would allow the trilateral trade pact to expire since the United States does not “need anything” from either Canada or Mexico.
“But they need everything that we have, and they have to treat us better,” Trump said, adding, “We don’t need their cars, we don’t need their lumber, we don’t need their energy, we don’t need anything.”
The USMCA—a replacement for the 26-year-old NAFTA—is the rulebook for approximately $2 trillion in annual trade between the North American partners, establishing provisions and safeguards for agriculture, automobiles, digital services, and labor across the three economies.
USMCA Concerns
In recent years, U.S. officials have scrutinized various parts of the agreement.
Washington has raised concerns with Canada over its dairy and supply management system, intellectual property protections, labor enforcement, and pharmaceutical pricing.
Commerce Secretary Howard Lutnick called the USMCA a “bad deal.”
With Mexico, U.S. trade officials have flagged issues around automotive rules of origin, content requirements, and wage enforcement.
Mexico is imposing higher tariffs on non‑regional countries to protect its economy, thereby supporting the broader North American market.
But to prevent companies from simply shifting production to Mexico and then exporting goods duty‑free to the United States, the senior administration official says rules of origin must require a certain level of U.S. content.
Those content rules, combined with tariffs, are meant to keep the system balanced and avoid creating loopholes that undermine the intent of the trade deal.
“So we have to have some kind of control, and the rule-of-origin requirement requiring U.S. content level is one way to get at that,” the official said.
Lawmakers have urged the White House to take action to protect workers, arguing the USMCA has enabled businesses to relocate south of the border.
“With workers in the Mexican automotive and electronics manufacturing sectors still only earning $3 to $5 per hour and Mexican manufacturing worker pay lower than in China, U.S. companies continue to offshore at alarming rates and use the threat of offshoring to depress U.S. wages,” a group of senators wrote in a May 20 letter.
The widening bilateral trade imbalance between Mexico and the United States has also been a source of frustration for the current administration.
Last year’s U.S. goods trade deficit with Mexico was nearly $197 billion, up 15 percent from 2024. Conversely, the goods trade gap with Canada was $46.4 billion, down 25 percent.
But trade turbulence might not spell the end of the USMCA, says Scott Lincicome, the Cato Institute’s vice president of general economics.
“This will inject uncertainty into North American supply chains, likely hampering investment on the margins. But in terms of day-to-day trade among the three nations, it’ll be unnoticeable,” Lincicome wrote in a July 1 blog post.
However, failed trade talks could be worse for Canada’s “fragile” economic outlook, say strategists at State Street Investment Management.
Following back-to-back quarters of negative economic growth, the Canadian economy is trying to rebound. Early numbers have been mixed.
April’s GDP growth rate was 0.5 percent, driven by the natural resources and public administration sectors. The preliminary May growth estimate was a more anemic 0.1 percent.
“Canada is not facing a broad market break, but it is entering a phase where the winners and losers could diverge sharply,” they wrote in a June 30 research note.
“The macro story is one of fragility rather than collapse: growth has been downgraded, the economy has slipped into a shallow technical recession, and the recovery now depends heavily on whether the uncertainty around the [USMCA] clears or deepens.”
By comparison, the U.S. economy grew 2.1 percent in the first quarter and is poised for almost 3 percent growth in the second quarter.
Matthew Horwood contributed to this report.
