Trump administration declines to extend USMCA, opening a path to its possible expiration in 2036

The Trump administration is expected to formally notify its North American partners on Wednesday that the United States does not plan to extend the U.S.-Mexico-Canada Agreement, a step that would begin a long review process and start a 10-year countdown that could end with the pact expiring in 2036 if no new agreement is reached.

The expected declaration does not amount to an immediate withdrawal from the trade deal. Instead, it triggers a six-year review under the agreement’s sunset clause, a mechanism negotiated during President Donald Trump’s first term when USMCA replaced the North American Free Trade Agreement in 2020. If the three countries fail to agree on revisions and an extension, they would face annual review sessions for the next decade, leaving the pact in prolonged uncertainty until its scheduled expiration on July 1, 2036.

Trade officials from the United States, Mexico and Canada were expected to meet virtually on Wednesday to state whether they want to extend the agreement for another 16 years. Greta Peisch, a former general counsel at the Office of the U.S. Trade Representative who is now a partner at Wiley Rein in Washington, said she expected “July 1st to come and go” without the United States confirming that it wants an extension.

Peisch also said it remained unclear whether Washington would publicly spell out its demands in a statement after the meeting.

The move comes as the administration presses for major changes to North American trade rules, especially in autos and in measures aimed at preventing Chinese goods from benefiting from USMCA preferences. Reuters reported that U.S. Trade Representative Jamieson Greer has already scheduled a third round of negotiations with Mexico for the week of July 20, a sign that Washington intends to keep pushing for revisions rather than preserve the current pact unchanged.

According to people familiar with the talks cited by Reuters, U.S. negotiators have asked that all vehicles built in North America contain 50% U.S.-specific content. That would raise regional content requirements to 82% for vehicles seeking duty benefits under the agreement. Greer has also said that vehicles assembled in Mexico and Canada would still likely face some level of tariffs.

A Mexican official told Reuters that Mexico and the United States have discussed a possible global tariff of 15% on autos, with a lower rate for vehicles from Mexico and Canada if stricter rules of origin are accepted. The same official said both governments broadly agree on what they see as core problems under the current system: a decline in U.S. manufacturing jobs, lower U.S. content in vehicles as Asian parts gain share, and concerns about transshipment.

“Mexico and the U.S. are in agreement about the goals,” the official told Reuters. “What we are discussing is how to reach them.”

For now, formal negotiating rounds are taking place between Washington and Mexico, while Canada remains outside that structure. Reuters reported that Greer has not set a formal schedule for negotiations with Canada, even though he continues discussions with Canadian Trade Minister Dominic LeBlanc.

That reflects broader tensions between Washington and Ottawa. The list of disputes includes Canada’s protected dairy market and moves by some Canadian provinces to remove American liquor from government store shelves. Those frictions matter beyond politics because they can spill into market access for beer, wine and spirits across North America. If trade talks remain strained or unresolved, alcohol producers and importers could face a longer period of uncertainty over cross-border sales conditions, distribution access and future tariff exposure.

The sunset review process is separate from another clause in USMCA that allows any of the three governments to terminate participation more quickly. Under that provision, Trump or his Canadian or Mexican counterparts could trigger a withdrawal within six months. The administration’s expected action on Wednesday does not invoke that faster exit route, but it reinforces Trump’s long-running dissatisfaction with the agreement.

Trump once praised USMCA as “the fairest, most balanced, and beneficial trade agreement we have ever signed into law” when it took effect. But he later turned against it as the U.S. goods trade deficit with Mexico widened, helped in part by companies shifting supply chains away from China after tariffs were imposed on Chinese imports during his first term.

He has repeatedly said he does not want simply to renew USMCA and has instead favored steep tariffs on Mexican and Canadian autos as well as steel and aluminum. That position has raised doubts about whether the current review will produce a straightforward extension or open a much broader renegotiation over how North American trade should work.

If no consensus emerges, businesses across sectors would be left operating under an agreement that remains in force but under constant review. For manufacturers, farmers and beverage companies alike, that kind of limbo could complicate investment decisions and long-term planning across one of the world’s largest integrated trading regions.