The Trump administration is poised to formally declare on 1 July that it will not extend the US–Mexico–Canada Agreement (USMCA) for a new 16-year term, a decision that activates the treaty’s sunset clause and begins a decade-long countdown to its possible expiration in 2036. The move, reported by officials and trade specialists in Washington, does not constitute a withdrawal but instead locks in a process of mandatory annual joint reviews for the remaining 10 years of the original term. Both Mexico and Canada had already submitted written confirmations supporting a full extension, leaving the United States as the sole party to withhold consent.

The mechanism is set out in Article 34.7 of the pact, which required each government to confirm its desire to prolong the agreement by the sixth anniversary of its entry into force. With the US declining, the three trade ministers will now convene annually to assess the agreement’s operation and consider any proposed changes. The treaty remains in force throughout this period, and any country could still agree to a 16-year extension at a later review. Separately, any party may withdraw with six months’ notice, though no government has signalled an intention to do so.

Viewed from Mexico City, the decision prolongs a climate of commercial uncertainty that is already weighing on investment. President Claudia Sheinbaum confirmed Mexico’s support for a 16-year extension and noted that the treaty’s defenders include US, Canadian and Mexican businesses integrated into regional supply chains. The US negotiating stance, however, is driven by demands to raise American and regional content in automotive production, tighten rules of origin to curb Chinese transshipment, and address long-standing irritants with Canada over dairy market access. Washington has so far conducted formal negotiating rounds only with Mexico, scheduling a third session for the week of 20 July, while leaving Ottawa on the sidelines amid a broader list of bilateral trade frictions.

The immediate next step is a virtual meeting of trade chiefs on 1 July, where US Trade Representative Jamieson Greer, Mexican Economy Secretary Marcelo Ebrard and Canadian Minister Dominic LeBlanc are expected to acknowledge the divergent positions. Analysts in North American capitals anticipate a protracted phase of sector-by-sector bargaining rather than a swift comprehensive deal, with the auto industry and steel and aluminium tariffs likely to dominate early discussions. The treaty’s survival in some form remains the baseline scenario, but the shift from a fixed long-term framework to an annually reviewable arrangement injects a new level of strategic unpredictability into continental commerce.