The Trump administration has decided not to renew the trilateral trade agreement with Canada and Mexico, opting instead for an annual review of what President Donald Trump once called “the best deal we’ve ever had.”
The widely anticipated decision on the United States-Mexico-Canada Agreement, known as USMCA, was revealed on Wednesday, the deadline for North America’s three trading partners to decide whether to renew the agreement for another 16 years.
The decision means the USMCA will remain in effect for another 10 years unless a member state attempts to withdraw. But it also triggers an annual review that could lead to the renegotiation of key parts of the treaty.
President Trump “chose not to rubber-stamp the USMCA renewal without addressing existing issues,” a senior administration official told reporters on a call announcing the move.
“In other words, the United States did not agree to update the USMCA in its current form,” the official said. “As a result, USMCA will not be renewed.”
The official said Trump’s “primary” concerns about USMCA center on the U.S. trade deficit with both countries’ trading partners.
File photo: U.S. President Donald Trump arrives with Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau to make a statement on the signing of a new free trade agreement in Buenos Aires on the sidelines of the G20 Leaders’ Summit on November 30, 2018.
Saul Loeb | AFP | Getty Images
The official added that President Trump “already changed the nature of the U.S.-Canada-Mexico trade relationship” through tariffs ahead of Wednesday’s deadline.
U.S. Trade Representative Jamieson Greer said in a statement during the call that the Trump administration “continues to engage with Mexico and Canada to address the shortcomings of the agreement.”
USMCA was negotiated during President Trump’s first term to replace the previous 26-year-old trilateral trade agreement known as NAFTA, which Trump frequently criticized as a poor deal for the United States.
When the new agreement went into effect in July 2020, President Trump touted it as “the fairest, most balanced and beneficial trade agreement we’ve ever signed.”
But President Trump’s enthusiasm for the USMCA has waned recently, at the same time as tensions between the United States and its two neighbors have increased.
“I don’t know if I’ll renew the USMCA,” President Trump said in June. “We don’t need anything Canada has. We don’t need anything Mexico has. But they need everything we have. And they have to treat us better.”
President Trump has long complained that the United States maintains trade deficits with its economic partners. In an effort to address this sense of injustice and force other policy changes, President Trump imposed a series of tariffs on nearly every country in his second term, including Mexico and Canada.
President Trump’s tariff plan has since been hampered by court losses.
The United States and Mexico have already begun a series of bilateral negotiations, which are expected to continue beyond the July 1 deadline. However, the United States and Canada have not begun their own talks.
