The United States Has Opted Not to Extend the USMCA

The United States has opted not to renew the United States-Mexico-Canada Agreement (USMCA) for another 16 years, triggering instead the annual review process that runs to 2036. But the decision settles little. Bilateral negotiations are set to continue without a clear timeline, tariff threats remain on the table, and businesses across North America face an extended stretch of uncertainty over the future of the region’s most important trade pact. What comes next depends less on the July 1 announcement than on the agenda, sequencing, and political will that follow it. In this Experts React, CSIS scholars analyze the road ahead.

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The USMCA’s World Cup Summer: No Breakup, Just Extra Time

Diego Marroquin Bitar, Fellow, Americas Program

The United States has opted not to pursue a clean, 16-year renewal of the USMCA. That doesn't mean the pact ends. Without an extension, the USMCA simply continues on its current terms until it expires on July 1, 2036. Still, the three countries have room to extend the agreement and preserve the trade pact that has helped U.S. businesses thrive, Mexican autoworkers earn higher wages, and Canadian farmers grow export markets. That window won’t stay open on its own. The parties are heading into a longer, more protracted negotiation. The more it drags on, the more uncertainty compounds across supply chains, growth prospects, and the jobs and investment this integration supports. None of that will be easy to win back once it’s gone. Firms will simply keep delaying expansion, hedging their bets, and steering investment elsewhere, and the damage will show up less as sudden decline than as absence: plants that don’t get built, jobs that don’t get created, supply chains that quietly settle somewhere else while everyone waits to see how this ends.

That waiting game is set to run through the summer, on two fronts. On the pitch, all three North American countries remain in contention in the World Cup, chasing a shot at the final. In trade policy, expect the same kind of drama: more tariff threats and more brinkmanship before the issue is resolved. The USMCA has a final whistle, too: July 1, 2036. The whole point of this review is making sure the game never goes that long. Every team left in this tournament knows exactly how many games stand between them and the final. Nobody in this negotiation can say the same about how many rounds stand between here and a renewed USMCA. That number, not another tariff threat, is what would actually move capital off the sidelines.

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The USMCA Review: Welcome to the Hotel California

Kellie Meiman Hock, Adjunct Professor, Georgetown University

Investors yearning for stability understood long ago that the July 1 USMCA “joint review” would offer little comfort, with a 16-year extension unimaginable. Under the USMCA, this means “the Commission shall meet to conduct a joint review every year” until 2036.  

Yet, orderly annual trilateral meetings feel equally unimaginable—although it is positive that the parties met trilaterally on July 1. Instead, a “Hotel California”–style, ongoing review is likely. To quote the Eagles, “you can checkout anytime you like, but you can never leave.” 

Checking out (withdrawal from the agreement) will continue to be threatened, despite the USMCA representing roughly $2 trillion in trilateral trade, up nearly $400 billion since the agreement went into force in 2020, and one-third of all imported U.S. manufacturing inputs originating in Canada and Mexico. The Chamber of Commerce estimates that North American trade supports 13 million American jobs, and Canada and Mexico are the United States’ top two agricultural export markets, by far. 

So, despite expected continued “checkout” threats, the devastating economic impact of withdrawal makes it unlikely, which explains why the USMCA enjoys unique carveouts from the administration’s tariffs.

All of this means that North America “can never leave” the Hotel California that is this review. Deliberations—still bilaterally conducted—will not conclude quickly. Trade issues that never fully resolve (including lumber, dairy, cultural industries, digital trade, energy, labor, and seasonal produce) are challenging enough, and then there’s U.S. efforts to further tighten auto rules of origin, already the most stringent in the world. 

Core to the review, however, is addressing Chinese involvement in North America. U.S. imports from China have decreased significantly in recent years, but the U.S. trade deficit with Mexico has doubled since the USMCA came into force. Ensuring China does not deploy the USMCA as a backdoor for its overcapacity is a shared concern, lending heft to talks about unified tariff treatment, inbound investment and transshipment screenings, export controls, and sanctions. Evaluating origin of capital within rules of origin, with possible “de maximus” levels for Chinese content, is another concept reportedly under consideration. All are ideas worth discussing, but none will be easy given the global economy’s overreliance on Chinese intermediate goods. 

Meanwhile, Canada and Mexico are left questioning the value of the USMCA if Section 232 and 301 tariffs undercut market access. Recalling the late-stage deal on Section 232 steel and aluminum tariffs in the NAFTA renegotiation, can another Hail Mary pass be expected late in the fourth quarter? Or will Canada and Mexico remain frustrated in their attempts to gain relief? 

These dynamics do not point to a tidy resolution of the review, reinforcing transparent rules that have made the USMCA the vehicle of North American competitiveness. Meanwhile, companies delay major investment decisions and muddle onward. Hopefully the Hotel California has good room service, because unfortunately we are going to be here for a while.

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The USMCA’s Biggest Barrier Is Political, Not Economic

Eric Miller, President, Rideau Potomac Strategy Group

To read the text, the review of the USMCA on July 1, 2026, should have been rather clinical. After assessing its operation and considering amendments, the United States, Canada, and Mexico had to say if they are ready to extend the deal for another 16 years. As the United States was not in agreement, the three countries now must revisit the “extension” question every year for the next decade.

This assumes that the USMCA survives. President Trump has made repeated statements expressing both indifference and hostility toward the agreement that he negotiated. In addition, the United States has initiated bilateral negotiations with Mexico and presumably at some future date will do the same with Canada. It is unclear how these agreements would relate to the existing USMCA framework. 

Regardless of the ultimate architecture, politics will play a key role in any USMCA renewal. While U.S.-Mexico relations are always complicated, U.S.-Canada relations are at their lowest point in modern history. This constrains the political space available to leaders to make deals.

When the United States imposed tariffs on all its trading partners from February to April 2025, only Canada and China imposed counter-tariffs on U.S. goods. Washington took note. Canada has maintained a steadfast anti-tariff position, dairy notwithstanding. Moreover, threats in some quarters to use Canada’s sizeable oil and electricity exports to the United States as leverage have been viewed as especially concerning. Senior U.S. officials have grown steadily more frustrated with Canada.

Canada sees things differently. U.S. tariffs are viewed as a threat to Canadian prosperity and a betrayal of the long-established partnership between the two nations. In addition, President Trump’s repeated threats to annex Canada and make it the “51st state” have been seen by Canadians not only as deeply offensive, but as an existential challenge to their nation’s survival. Former Conservative Prime Minister Stephen Harper, historically a friend of the United States, stated in February 2026 that Canada must make “any sacrifice necessary” to urgently reduce its dependence on the United States.

Canada’s national mood as it celebrated its 159th birthday on July 1 was proud and defiant. While this is a powerful combination, major USMCA compromises may be viewed with deep skepticism. On June 25, 2026, Prime Minister Mark Carney had to remind the public that Canada must be ready to strike a USMCA deal if the right opportunity arises.

What may eventually save the USMCA is its eternal value proposition. Roughly one-quarter to one-third of the value of U.S. imports from Canada and Mexico is U.S. content. No other region of the world comes close. By contrast, U.S. content levels are in the single digits in its imports from Asia and Europe. The intensity of the intraregional trade linkages drove President Trump to exempt many USMCA originating goods in March 2025. It may eventually be the lynchpin to a full USMCA renewal—just not in July 2026.

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USMCA Nonrenewal Is Not the End of North American Integration

Juan Carlos Baker, Researcher, Foreign Trade and Investment Research Laboratory, Pan American University, and former Mexican Deputy Trade Minister 

While some headlines portray this decision as a dramatic turning point for North American trade, the announcement itself should come as little surprise. President Trump spent months signaling his dissatisfaction with the agreement, and markets, businesses, and policymakers have had ample time to prepare for this outcome. Moreover, maintaining leverage rather than providing certainty has long been a defining feature of President Trump’s negotiating style, and the USMCA review appears unlikely to be an exception.

Beyond the announcement itself, what is more important is what comes immediately afterward. Framing the nonrenewal as the beginning of a negotiation process, accompanied by a roadmap for further negotiations, with scheduled meetings, clearly identified issues, and a timeline for future deliverables, may actually reassure stakeholders, easing the uncertainty and tension that the nonrenewal may bring. Conversely, if the White House simply declares that the agreement will not be renewed and offers no path forward, uncertainty across North America will increase significantly.

Indeed, much of the current commentary assumes that the nonrenewal represents a major setback for Mexico and Canada; however, although prolonged uncertainty undoubtedly carries costs for both countries, those costs are by no means borne by them alone. The integrated nature of North American supply chains means that U.S. manufacturers, investors, and consumers also depend heavily on a predictable institutional framework. Automotive companies, agricultural exporters, machinery producers, and countless suppliers have structured investment decisions around the assumption of continued regional integration. Extending uncertainty indefinitely imposes costs on all three partners, including the United States itself—even if President Trump claims that the United States does not need anything from Mexico or Canada. 

This is why domestic pressure on the White House as a result of President Trump’s decision should not be disregarded. If uncertainty begins to delay investment decisions or disrupt supply chains, U.S. businesses are likely to become an increasingly influential constituency in favor of a negotiated outcome, especially in an election year.

Finally, the process ahead is likely to become more political, more contentious, and more closely linked to broader issues such as industrial policy, economic security, and relations with China, but after all, has that not been evident already for some time?

The nonrenewal, then, should not be mistaken for the collapse of North American economic integration. Instead, it marks the formal beginning of a new bargaining phase in which leverage, rather than certainty, will remain Washington’s preferred negotiating instrument.

The real story begins after July 1. The announcement itself was largely expected. What will truly matter is the agenda the United States places on the table, and whether it leaves enough room for meaningful negotiations to continue.

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The USMCA Question Nobody’s Asking: Does Congress Even Get a Vote?

William Alan Reinsch, Senior Adviser (Non-resident), Economics Program and Scholl Chair in International Business

The July 1 decision of the three countries party to the USMCA to not renew the agreement and instead trigger the 10-year annual review process opens the door to a potentially extended period of negotiation. It appears that talks will continue without interruption, which creates the possibilities of either an early conclusion—in time for Trump to declare victory before the midterm election—or extended talks, timing that could lead the United States to increase its demands once the election is over.

Either way, business will have to grapple with the continuing uncertainty of both the negotiations and the aftermath, where the issue is whether the resulting agreement must be submitted to Congress for approval. The initial USMCA agreement was submitted to Congress and approved pursuant to then-existing Trade Promotion Authority (TPA), which expired in 2021. TPA, an updated version of procedures initially enacted in the Trade Act of 1974, created a trade-off for the president. If he followed the procedural consultation requirements and time limits, Congress would consider the agreement without delay, amendment, or filibuster, a significant advantage. However, recent administrations have taken the position that agreements only need congressional approval if they require changes in U.S. law. On that basis, a number of agreements, including Trump’s with Japan and Biden’s with Taiwan, were not sent to Congress. In the latter case, Congress rebelled and passed legislation—which Biden signed—retroactively approving the first half of the Taiwan agreement and requiring the second half to be submitted for approval. The congressional position has generally been that all agreements should be submitted for approval; just as the president’s has been that as few as possible should be submitted.

It is too soon to say whether a revised USMCA would have to be sent to Congress, but some of the issues likely on the table, such as changes in U.S. trade law to accommodate regional or sectoral U.S. interests or changes in tariffs, would point in that direction. The complication this time is that there is no TPA to structure the congressional process, which means the agreement, if submitted, will be subject to normal legislative procedures, including possible delay and amendment. That creates two challenges for the administration. The first will be to try to avoid that possibility by negotiating an agreement that does not require approval and then dealing with congressional insistence that it be submitted anyway. The second will be the additional uncertainty created in Congress if it is submitted without any procedural limitations. In 2021, many in the business community urged the Biden administration to seek renewal of TPA even if there were no plans to use it. That did not happen, and the Trump administration may now have to deal with the consequences.