On 1 July, the United States is expected to formally decline a 16-year extension of the US-Mexico-Canada Agreement, the trade pact that governs nearly $2 trillion in annual trilateral commerce. The decision, which officials in Washington have signalled for weeks, will not immediately terminate the agreement but will instead trigger a mechanism that subjects it to yearly joint reviews for up to a decade, with a hard expiration date of 1 July 2036 if no consensus on renewal is reached. Canada and Mexico have both submitted letters supporting a full extension.

The move activates Article 34.7, the sunset clause negotiated during the first Trump administration. Under its terms, the three countries were required to confirm on the sixth anniversary of the pact’s entry into force whether they wished to extend it for another 16 years. A failure to do so by any party automatically shifts the agreement into annual review mode, preserving existing tariff-free access but injecting a structural uncertainty that analysts in Washington describe as a deliberate tool of leverage. Viewed from Mexico City, the shift transforms the treaty from a stable framework into what one commentary called “an annual contract,” subject to continuous renegotiation.

The US position reflects a deeper, bipartisan reorientation of American trade policy that predates the current administration. While President Donald Trump has repeatedly threatened to withdraw from the pact entirely, the institutionalisation of industrial policy under his predecessor—through subsidies, local-content rules, and the securitisation of supply chains—has created a consensus that market access is a privilege to be earned, not a permanent right. US Trade Representative Jamieson Greer has indicated openness to bilateral deals and is pressing for higher American-specific content in automobiles and stricter rules of origin to curb Chinese transshipment. Ottawa, meanwhile, has been sidelined from formal negotiations, with bilateral talks between the US and Canada yet to begin, while Mexico has advanced in sectoral discussions, including on agricultural imports and rules of origin.

For integrated industries, particularly automotive and manufacturing, the annual review cycle introduces a persistent chill on investment decisions. Business councils from all three countries have jointly urged that goods meeting regional content rules remain tariff-free. The next concrete milestone is the virtual meeting of trade ministers on 1 July, where the US is expected to make its non-extension official. Subsequent rounds are scheduled, including a US-Mexico session in Mexico City the week of 20 July. The agreement’s ultimate fate now hinges on whether a new extension can be negotiated within the 10-year window, or whether the continent’s commercial architecture will lapse in 2036.