The United States declined on Wednesday to renew the United States–Mexico–Canada Agreement in its current form, missing the 1 July deadline for a 16-year extension that would have locked the trilateral trade pact in place until 2042. The immediate consequence is that the agreement, which governs nearly $2tn in annual goods and services trade, will now be subject to rolling annual reviews and is set to expire in 2036 unless all three governments agree on a new deal. The USMCA remains in force, but the refusal to extend it injects a decade of recurring uncertainty into some of the world’s most integrated supply chains.

The decision was announced after a virtual meeting of trade ministers from the three countries. US Trade Representative Jamieson Greer said the United States “did not agree to renew the USMCA in its current form” and would continue to engage with Mexico and Canada to address “the agreement’s shortcomings and our trade deficits with these countries.” A senior administration official later told reporters that the US goods deficit with Mexico, which reached roughly $197bn last year, and a $46bn deficit with Canada were central to Washington’s stance. The official also pointed to Canada’s deepening economic ties with China as a major obstacle, a concern not mentioned in the formal statement but flagged separately by Greer. The administration signalled it could withdraw from the pact before 2036 if its demands are not met, though it also said it wanted to “come to a conclusion quickly.”

Viewed from Ottawa, the outcome was framed as a continuation of discussions rather than a rupture. Dominic LeBlanc, Canada’s minister of intergovernmental affairs, said the three countries had agreed on the importance of ensuring the trade framework “continues to support North American prosperity and competitiveness.” He added that Canada would press ahead with negotiations on US sectoral tariffs covering aluminium, steel, lumber and automobiles, and expressed confidence that Canada entered the talks from a position of strength. Mexico City struck a notably optimistic tone: Economy Secretary Marcelo Ebrard said there were “no insurmountable differences” and noted that Washington’s pending complaints under the agreement had fallen from 54 to 14. Mexico and the US have already held two rounds of bilateral negotiations, with a third scheduled for the week of 20 July; formal US–Canada talks have yet to begin.

The refusal to extend the pact does not immediately alter day-to-day trade, but it unsettles investment planning, particularly in the automotive sector, where rules of origin require 75 per cent of a vehicle’s content to be sourced within North America to qualify for duty-free treatment. Business groups across the continent had urged an extension, warning that annual reviews would chill capital spending. Some US steel manufacturers, however, welcomed the shift, arguing it gives American negotiators leverage to tighten rules of origin and limit third-country transhipment. The next concrete milestone is the US–Mexico bilateral round later this month, which will test whether the three governments can narrow their differences before the first annual review cycle deepens the uncertainty.