Negotiations are set to begin Monday between U.S. and Mexican trade officials as the United States, Mexico and Canada start a potentially contentious effort to renew the USMCA trade pact. The agreement, which took effect July 1, 2020, underpins a large share of daily commerce between the three countries, with more than $4 billion worth of goods crossing the United States’ borders with Canada and Mexico each day.
Much of that cross-border trade has been duty-free under USMCA’s rules. The U.S. and its partners now face uncertainty about whether they can renew the pact smoothly or whether the process will produce major changes—or even an end to the three-country arrangement.
The U.S. is seeking changes to the treaty, and the top U.S. trade negotiator told Politico in December that President Donald Trump would be willing to pull the United States out of the pact if he cannot get the deal he wants. Trump also suggested last fall that the United States could negotiate separate deals with Canada and Mexico, ending the three-country North American bloc that previous administrations viewed as central to competing economically with China and the European Union.
Under the renewal process described, the three countries could agree to renew USMCA as it is for another 16 years, though that prospect appears unlikely. If they fail to reach an agreement, the countries have until 2036 to complete renewal negotiations or the pact expires. Separately, any USMCA country can pull out with six months’ notice, an option Canada and Mexico fear could be used impulsively.
The stakes are described as $1.6 trillion in annual trade in goods between the United States and its two USMCA partners. Mexico and Canada rank far ahead of China in exports to and imports from the United States, and American farmers are among those pressing to keep the framework in place, shipping nearly $31 billion in agricultural products to Mexico and $28 billion to Canada last year.
While some U.S. tariffs have spared goods that comply with USMCA rules, the story says several categories still face added costs. Medium- and heavy-duty trucks face a 25% tariff, and a 50% tariff on steel, aluminum and copper remains in effect. Mexican tomatoes face a 17% tariff, even as much other compliant trade continues duty free.
USMCA replaced NAFTA, negotiated in 1994 under President George H. W. Bush and signed into law by President Bill Clinton. Trump and other critics had argued NAFTA was a “killer of U.S. jobs,” saying it encouraged U.S. firms to move factories south of the border to use low-wage Mexican labor and then ship goods back to the United States duty free.
The article says USMCA ended up very similar to NAFTA, but included provisions intended to encourage higher wages and require more of what regional factories produce to originate in North America. It also updated North American trade rules for the digital age, including a ban on the three countries slamming each other with import taxes on electronically sold products such as music, software and games.
In remarks attributed to him, Trump said USMCA was “the fairest, most balanced and beneficial trade agreement we have ever signed.” The article adds that the president’s interest appears to have waned as the renewal talks approach, saying that in January Trump expressed little interest in the effort, saying, “no real advantage to us. It’s irrelevant to me.”
U.S. negotiators are expected to seek stronger rules to prevent goods from China from entering the United States under USMCA, along with steps intended to encourage more production in the United States. They also plan to press for more access to Canada’s protected dairy market for U.S. farmers.
Mexico’s priorities, the article says, center on avoiding a major rewrite of the agreement and making rules of origin more flexible. Mexican negotiators are seeking a system that would allow imports of parts from outside North America when they are not available in the region, and they also want assurances that any agreement will hold, as protection against Trump’s unpredictability and tariff enthusiasm.
Mexico wants to minimize tariffs as much as possible, and Mexican Economy Secretary Marcelo Ebrard said Mexico wants to strengthen the dispute resolution system already in place under the treaty. He said that would not eliminate the possibility of tariffs, but would provide clear, swift channels for seeking solutions when problems arise. Mexico’s administration also faces security challenges, the article says, after the killing of Jalisco New Generation Cartel’s leader in late February, and officials expect that those issues could influence economic discussions.
Mexico anticipates that Canada will join the talks later, but its top priority over the coming months is reaching agreements while maintaining free trade with the United States. In comments attributed to Ebrard, Mexico has argued for continued regional integration as a competitiveness tool, saying, “The integration of our countries is an absolute prerequisite for the United States to remain competitive,” and, “We must move forward together; otherwise, we will not succeed.”
The article also points to trade imbalances that have fueled criticism of the agreement. It says the U.S. deficit in goods trade with Mexico rose last year to a record $197 billion, and that the United States ran a merchandise trade deficit with Canada of $46.4 billion last year, following a decrease from 2024.
“Improvements are required for it to deliver the high-wage U.S. manufacturing powerhouse and balanced trade (Trump) promised and we need,” said Lori Wallach, director of the Rethink Trade program at the American Economic Liberties Project.