Trump Rejects Extension of North American Trade Deal, Pushing Annual Negotiations

[Financial News] The Trump administration has refused to automatically extend the United States–Mexico–Canada Agreement (USMCA) and has begun a full review process. The move appears aimed at keeping the North American free trade framework in place while making the deal a subject of annual negotiations to maximize U.S. trade interests.
On the 1st local time, Jamieson Greer, the United States Trade Representative, said in a statement, "The United States does not agree to renew the USMCA in its current form," adding, "The agreement will not be renewed."
He explained, "The United States will continue consultations to address the agreement's shortcomings and the trade deficit with Mexico and Canada," and added, "The agreement will remain in effect until the issues are resolved or the agreement expires."
The USMCA was signed by the first Trump administration in 2018 to replace the North American Free Trade Agreement (NAFTA), and took effect in July 2020.
The deal sets a 16-year term and requires the three countries to jointly review whether to extend it every six years. The deadline for the first extension decision was reached on this day, but because the United States did not agree to an extension, the agreement will not be automatically renewed.
Mexico and Canada both supported a 16-year extension, but with the United States opposed, the agreement will remain in force for now and move into an annual review system. If the three countries fail to reach an agreement before 2036, the deal will automatically expire. It will also end if any one country announces its withdrawal.
The Trump administration said the decision was intended to protect the interests of U.S. workers, businesses, and farmers.
A senior administration official said, "President Trump did not agree to a symbolic extension of the agreement without resolving the existing problems," adding, "The United States is reshaping its trade policy based on reciprocity and balance, and the USMCA will also be reviewed within that framework."
The refusal to extend the agreement stems from trade deficits with Mexico and Canada, as well as concerns over non-tariff barriers.
Analysts say the USMCA, which Trump personally pushed during his first term, has shielded Mexico and Canada to some extent from U.S. tariff policy, but has fallen short of expectations in reducing the U.S. trade deficit.
Trade tensions between the United States and Canada also played a role. Washington has strongly criticized Canada for imposing retaliatory tariffs on auto and steel duties and for leading boycotts of U.S. liquor. During the recent USMCA talks, the United States held several formal rounds of negotiations with Mexico, but consultations with Canada were relatively limited.
The United States, Canada, and Mexico together account for about one-third of global Gross Domestic Product (GDP). Trade among the three countries rose from $1 trillion in 2020, when the agreement took effect, to more than $1.6 trillion last year, and is now estimated at around $1.9 trillion.
However, some say the agreement's effectiveness has already been significantly weakened after the United States imposed steep tariffs last year on Canadian and Mexican products not covered by the USMCA, citing fentanyl inflows.
The Trump administration says it will continue negotiations and may consider additional steps, including withdrawal from the agreement, if necessary. The United States is scheduled to hold bilateral talks with Mexico from the 20th to the 24th this month and plans to continue separate consultations with Canada.

[email protected] Kim Kyung-min Reporter