US won't renew trade deal with Mexico and Canada that Trump struck in 1st term

The administration says it will pursue new deals with North American neighbors.

The Trump administration announced Wednesday that the U.S. will not renew the United States-Mexico-Canada Agreement (USMCA), a key trade deal that President Donald Trump negotiated in his first term.

"The United States did not agree to renew the USMCA in its current form," a senior administration official said on a call with reporters. "The United States will continue to engage with Mexico and Canada as appropriate, but -- and during that time the USMCA will remain in effect."

The USMCA was negotiated by Trump to replace the North American Free Trade Agreement, signed during the George H.W. Bush administration, which allowed free trade among North American neighbors.

In a statement on the decision, U.S. Trade Representative Jamieson Greer pointed to "shortcomings and our trade deficits with these countries" as the reason for the U.S. decision not to renew the USMCA.

Instead, officials indicated the U.S. will pursue new trade deals with Mexico and Canada.

The USMCA deal runs until 2036 and, as officials noted, it will remain in place unless the countries negotiate new trade agreements.

But the official made clear that the administration could withdraw sooner than 2036 and emphasized that it seeks to "come to a conclusion quickly."

"Just because it has a 10-year timeline, it doesn't mean you have to wait those 10 years to conclude the agreement," the official said. "If the countries can't address problems within that time, the USMCA would end after 10 years, and certainly the president retains an ability to exit the agreement earlier, should he see fit."

However, the official added that it would be a "different situation" if Canada and Mexico got on board "completely" with U.S. demands.

The announcement came on the day the trade deal reached a key review deadline.

"For the joint review today, USTR hosted a virtual meeting with Mexico and Canada, and we conducted statutorily required review," the official said.

"Both sides went through and gave their views on the operation of the agreement, extension of terms, and potential next steps. President Trump, in the interest of American workers, citizens and farmers, we chose not to rubber stamp a USMCA renewal without addressing existing issues," the official added.

During his first term, the president touted the USMCA as the "best agreement we've ever made."

"The USMCA is the fairest, most balanced, and beneficial trade agreement we have ever signed into law. It's the best agreement we've ever made," Trump said during an event celebrating the agreement in January 2020.

Since then, however, the president has criticized the deal and Mexico and Canada, saying that North American trade partners have been "ripping off" the U.S.

Earlier this month, Trump said that he wasn't sure he would renew the USMCA, citing his belief that the U.S. doesn't "need" anything from Mexico and Canada and arguing that "they have to treat us better."

The senior administration official said Wednesday that they talked to Mexico about the trade deficit between the countries, strengthening rules of origin issues, and other issues. The official also pointed to the fact that Canada was one of the only countries to retaliate against the president's tariff policies.

"We are focused on ensuring that the USMCA benefits U.S. manufacturers, farmers, ranchers, workers, service suppliers and businesses of all sizes. And while there has been some progress over the past year, there is more work to do," the official said.

The official also pointed to the president's sweeping tariff actions since taking office for his second term, arguing that this has "already changed the nature of the U.S.-Canada-Mexico trading relationship" in ways that have "superseded" the USMCA.

With the USMCA now entering the process of annual reviews until its expiration in 2036, there is uncertainty on trade policy for businesses.

Car companies and their supply chains are particularly dependent on the movement of goods through USMCA and have been in the crosshairs of the administration's tariff policy.

"North American economic integration enables enormous competitive benefits for the region, and American Automakers are encouraged by ongoing negotiations with the U.S., Mexico and Canada," American Automotive Policy Council President Matt Blunt said in a statement, calling for "swift and durable resolution" on the USMCA.

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