US, Mexico and Canada kick off talks to renew USMCA trade pact

Every day, more than $4 billion worth of goods crosses the United States’ borders with Canada and Mexico, ranging from U.S. auto parts headed to northern Mexico to Mexican avocados shipped to California supermarkets and Canadian aluminum destined for products such as canned food. Much of that cross-border commerce has benefited from duty-free treatment under the USMCA, the trade agreement that President Donald Trump negotiated with the U.S.’s northern and southern neighbors during his first term. But the agreement’s future is uncertain as the three countries start what could be a tense effort to renew the pact this year.

Negotiations kick off Monday between U.S. and Mexican trade officials, with Canada expected to join the talks later. The renewal process is set on a timeline that gives the countries until 2036 to reach an agreement; if they do not, the pact expires. Separately, each USMCA country can withdraw from the agreement with six months’ notice, an option Canada and Mexico fear a volatile U.S. approach could make more likely.

Washington’s position is part of what makes the talks difficult. The U.S. is seeking changes to the treaty, and a top U.S. trade negotiator told Politico in December that Trump would be willing to pull the United States out of the pact if the administration could not get the deal it wants. Trump has also suggested last fall that the United States could negotiate separate deals with Canada and Mexico, which would end the three-country “North American bloc” that previous administrations said was important for competing against China and the European Union.

Officials and trading partners also confront the economics of tariff layering on top of USMCA rules. While the worst of Trump’s 2025 tariffs spared many goods that complied with USMCA requirements, some products did not receive the same protection. The U.S. levy list cited for trucks includes a 25% tariff on medium- and heavy-duty trucks, while tariffs remain in effect at 50% on steel, aluminum and copper, and at 17% on Mexican tomatoes. With USMCA in place, the stakes are high: trade in goods among the United States, Mexico and Canada totals about $1.6 trillion annually.

USMCA replaced the 1994 North American Free Trade Agreement, which Trump and other critics had criticized as contributing to job losses in the United States by encouraging companies to move production to Mexico for low-wage labor and then ship goods back duty free. The newer pact, ratified by Congress with support from Republicans and Democrats alike, is similar to NAFTA in structure but includes provisions intended to encourage higher wages and require that a greater share of what gets produced originates in North America.

The agreement also updates trade rules for digital commerce, including a ban on slamming import taxes on categories such as music, software, games and other products sold electronically. Trump previously praised the deal as “the fairest, most balanced and beneficial trade agreement we have ever signed,” but his interest in the upcoming renewal talks appears to have cooled, with him saying in January that the effort offered “no real advantage to us. It’s irrelevant to me.”

A central dispute in the renewal effort is how much USMCA should change to address what the U.S. views as weaknesses and unmet goals. The United States plans to push for stronger rules aimed at ensuring that goods from China do not slip into the United States under USMCA, to encourage more production in the United States, and to improve U.S. farmers’ access to Canada’s protected dairy market. Mexican negotiators, by contrast, want to avoid a major rewrite and to make rules of origin more flexible, including allowing imports of parts from outside North America when parts needed for production are not available within the region.

Mexico also wants agreements to “stick” as a hedge against U.S. unpredictability and enthusiasm for tariffs. Mexico’s Economy Secretary Marcelo Ebrard said Mexico wants to strengthen the dispute resolution system already in place under the treaty, describing that as a way to provide clear and swift channels for seeking solutions when problems arise. Mexico’s position on the value of the arrangement is also explicit: Ebrard has said that integration among the three countries is an “absolute prerequisite” for the United States to remain competitive, adding that “We must move forward together; otherwise, we will not succeed.”

At the same time, Mexico’s negotiation posture is shaped by domestic pressures. The Mexican government is managing ongoing security issues after the killing of the leader of the Jalisco New Generation Cartel in late February, and those concerns could influence economic discussions as the renewal talks unfold.