USMCA Renewal Shelved as US Opts for Annual Reviews

Washington has declined to renew the US Mexico Canada Agreement outright, choosing instead an annual review process that keeps the pact alive but under constant scrutiny through 2036 unless one of the three governments walks away first.

What the Annual Review Structure Actually Changes

The announcement came on July 1, 2026, the sixth anniversary of USMCA taking effect, which was also the deadline for the US, Canada and Mexico to agree on a 16 year extension. Instead, the pact now runs on a rolling basis for up to ten years, with the option of further extension through successive annual reviews. Absent a fresh agreement, the arrangement expires in 2036. US Trade Representative Jamieson Greer told Bloomberg the administration sees "substantial issues" with the current terms and is "not prepared to rubber stamp the agreement," a notable reversal given that Donald Trump signed the original USMCA into law in 2020.

Trade Volumes That Raise the Stakes

Trade among the three countries topped $1.6 trillion in 2024, up from roughly $1 trillion when USMCA launched. Collectively, the US, Canada and Mexico generate close to a third of global GDP, which explains why even procedural changes to the pact ripple through supply chains. About 90% of imports from Canada and Mexico now carry USMCA compliance status, and that compliance rate climbed last year as new tariffs pushed more companies to file the paperwork needed to claim preferential treatment.

Where the Disagreements Concentrate

The administration points to persistent trade deficits with both neighbors and to USMCA provisions that limit tariffs Trump has wanted to impose as central reasons for reopening the deal. Talks with Mexico have moved further along than those with Canada. A third round of US Mexico negotiations is scheduled for the week of July 20, expected to address rules of origin for industrial goods outside the automotive sector, along with aerospace, intellectual property and water quality, according to a senior administration official.

Canada, by contrast, has largely been sidelined from formal discussions in recent months. Dominic LeBlanc, the Canadian minister overseeing US trade relations, said the two sides "agreed on the importance of continuing our discussions and identifying ways to ensure trade and investment frameworks between Canada, the US and Mexico continue to support North American prosperity and competitiveness," adding that Canada wants substantive talks on sectoral tariffs affecting steel, aluminum, autos and lumber.

The friction fits a broader pattern between Trump and Canadian Prime Minister Mark Carney, who has pushed to reduce Canada's economic dependence on the US since taking office. Separate US tariffs on autos and metals remain unsettled and are expected to surface again once broader USMCA talks progress.

Why Mexico Has Moved Faster Than Canada

The uneven pace of talks, with Mexico further along in formal negotiations while Canada waits for a seat at the table, raises questions about whether a unified three country framework survives the review process intact or splits into separate bilateral tracks.