The US declined to renew the United States-Mexico-Canada Agreement (USMCA) in its current form following the pact's mandatory joint review on July 1, leaving the Section 232 tariffs on steel and aluminum in place as the three countries move toward a period of annual reviews.
The Office of the US Trade Representative (USTR) announced “The US, Mexico and Canada met virtually on July 1 to discuss the operation of the agreement.” US Trade Representative Jamieson Greer said, “The US did not agree to renew the USMCA in its current form. As a result, the USMCA is not renewed.”
However, the decision does not amount to a withdrawal. While any country can withdraw from the Agreement with six months’ notice, the USMCA remains in force pending resolution of the outstanding issues or until the agreement's termination, and the tariff exemption for goods that comply with the agreement's rules of origin also stays in place. Under the review mechanism, the pact now enters a cycle of annual reviews and would expire in 2036 if the three governments fail to reach a new extension agreement.
For the steel sector, the outcome leaves the Section 232 national security tariffs unchanged. The US currently applies a 50 percent tariff on imported steel and aluminum, including on Canadian and Mexican metal, and those duties are not affected by the non-renewal. Canada has identified steel, aluminum, automobiles and lumber as the sectoral tariffs it intends to discuss in future talks with Washington.
Initially, the USMCA was seen by the Trump administration as a better deal than the North American Free Trade Agreement (NAFTA) when first agreed to in 2020, but the Trump administration has indicated the trade deficit has since then “shot up” because other countries moved their businesses to Mexico to avoid tariffs. Last year, the US recorded a goods trade deficit of about $46 billion with Canada and about $197 billion with Mexico, according to the US Bureau of Economic Analysis.
Greer said the US will “continue to engage with Mexico and Canada to address the agreement's shortcomings and its trade deficits.” Mexico and Canada are both clear in seeking a 16-year extension of the agreement.
The USTR said the US will meet with Mexico the week of July 20 for a third round of bilateral negotiations tied to the joint review. Formal talks between the US and Canada have not yet begun.
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