The United States is set to declare on July 2 that it will not extend the U.S. Mexico Canada Agreement (USMCA), a move that starts a decade long process to wind down the 32 year old North American free trade zone unless the three countries strike new terms. At a Glance The declaration triggers a six
The United States is set to declare on July 2 that it will not extend the U.S. Mexico Canada Agreement (USMCA), a move that starts a decade long process to wind down the 32 year old North American free trade zone unless the three countries strike new terms.
At a Glance
- The declaration triggers a six year review period built into USMCA's sunset clause.
- Trade chiefs from the U.S., Mexico and Canada were set to meet virtually to discuss extending the pact by 16 years.
- U.S. Trade Representative Jamieson Greer has scheduled a third round of talks with Mexico for the week of July 20.
- Without agreement, the pact would face annual reviews for a decade before expiring on July 1, 2036.
- A separate termination clause could let any of the three countries withdraw within six months.
Why the Sunset Clause Matters Now
USMCA was written with a built in expiration mechanism, negotiated during Trump's first term, that forces the three governments to revisit the deal every six years. That clock starts ticking this week. If Washington, Mexico City and Ottawa cannot agree on revisions, the agreement does not collapse immediately. Instead it enters a kind of holding pattern, with fresh review sessions required every year for the following decade. Only if no deal emerges by then would the pact lapse entirely, on July 1, 2036.
Greta Peisch, a former USTR general counsel now a trade partner at Wiley Rein in Washington, expects the July 1 deadline to pass without the U.S. committing to an extension. She also noted it remains unclear whether the administration will spell out its demands publicly once the virtual meeting concludes.
What Washington Wants Changed
The talks are not just procedural. Negotiators are wrestling with significant demands, including higher required U.S. and regional content thresholds for automobiles built in North America, plus new safeguards meant to stop Chinese made goods from slipping into the USMCA zone tariff free. Greer's decision to schedule another round of negotiations with Mexico for the week of July 20 suggests the administration intends to keep pressing on these points regardless of what happens with the formal declaration.
Trump's Shifting View of the Deal
Trump's first administration built USMCA to replace the 1994 North American Free Trade Agreement, and he once called it
