US Rejects Automatic Extension of Trade Pact with Canada, Mexico

The United States on Wednesday rejected a 16-year extension of its free trade agreement with Canada and Mexico in its current form, deciding instead to pursue trilateral negotiations over the deal’s future. The uncertainty regarding the fate of the United States-Mexico-Canada Agreement, or USMCA, which came into effect in 2020 during President Donald Trump’s first term, is likely to complicate investment plans for companies doing business across the continent, including Japanese automakers.

US Trade Representative Jamieson Greer said Washington would continue talks with Canada and Mexico to address shortcomings and the US trade deficit with those countries. Under the original terms of the USMCA, the trilateral trade pact will now be reviewed annually and will expire in 2036 if no extension agreement is reached.

“For the sake of American workers, businesses, and farmers, we are choosing not to immediately agree to a USMCA extension without addressing existing issues,” a senior administration official told reporters. The official noted that a core issue for President Trump is that the USMCA, which replaced the North American Free Trade Agreement that had been in place for 26 years since 1994, has not sufficiently balanced the US trade deficit with its two neighbours. The official added that the problems also include opportunities for US market access in Canada and Mexico.