US declines to renew USMCA, triggering annual reviews and renegotiations

The Trump administration on Wednesday declined to renew the United States-Mexico-Canada Agreement (USMCA) in its current form, triggering a process of annual reviews and potentially lengthy renegotiations of the trade pact governing nearly $2 trillion in annual goods and services among the three countries Source: AP News; CNBC.

The Decision

U.S. Trade Representative Jamieson Greer announced after a virtual meeting with Mexican and Canadian officials that the U.S. "did not agree to renew the USMCA in its current form" Source: DW News. The agreement will remain in force until its 2036 expiration, but instead of a 16-year extension, the three nations will now conduct annual reviews, opening the door to contentious talks on tariffs and rules of origin Source: CNN. Mexico and Canada had both sought an extension, with Mexico's Economy Minister Marcelo Ebrard saying no country has expressed intent to withdraw Source: Mexico News Daily.

The Sticking Points

The U.S. is demanding measures to reduce trade deficits with Mexico and Canada, strengthen rules of origin for automobiles, and limit Chinese goods from benefiting from USMCA access Source: Fox Business. The administration has signaled a preference for bilateral deals rather than a trilateral pact Source: Fox Business. Canada faces a tougher negotiating position after imposing retaliatory tariffs on U.S. goods Source: Fox Business, while Mexico has been more constructive, with a third round of bilateral talks scheduled for July 20 in Mexico City .