Are you tired of trade and tariff talk? Well, too bad, because President Trump apparently loves messing with it. He’s now saying he won’t reauthorize the U.S.-Mexico-Canada Agreement, a trade deal between the three countries, and that action is going to set the stage for months (or even years) of negotiations over vehicle tariffs and other key industries. Of course, Trump’s first administration was the one that originally came up with the USMCA back in 2018, replacing its long-standing NAFTA arrangement. What a time to be alive!
The three counties are facing a July 1 milestone to extend the pact as it currently stands for another 16 years. That wasn’t expected to happen, but Trump has escalated tensions with our neighbors to the north and south horrendously since returning to office. Without an extension, the deal will enter rolling annual reviews but remain in force for up to a decade… unless one country exits entirely.
Trump hasn’t said if he’s planning on taking that action just yet. Technically, any country can as long as they give six months’ notice. From Bloomberg:
“I’m not looking to renew it,” Trump told reporters Wednesday at the White House. “Because to be honest with you, the United States does much better. We don’t need anything that Canada has, we don’t need anything that Mexico has, but they need everything that we have, and they have to treat us better.”
The Mexican and Canadian governments did not immediately reply to a request for comment. The next round of US-Mexico talks is set for this month, followed by a third in July. The US and Canada have not yet launched formal negotiations.
Mexico and Canada are two of the largest US trading partners, doing nearly $2 trillion in annual trade with each other. Goods that are compliant with the agreement have largely been exempt from Trump’s barrage of tariffs, helping keep prices lower for US consumers.
[…]
Trump has been pressing to change the pact and reshore key industries such as auto manufacturing, but the scope of his ambitions is not clear. The Office of the US Trade Representative has consistently declined to specify whether the US is willing to reopen the text of the agreement, which would almost surely require a vote in Congress.
Instead, talks have focused on bilateral side-deals that are poised to center on whether the countries can strike agreements where Canada and Mexico offer concessions in exchange for tariff relief, particularly over Trump’s so-called Section 232 tariffs on automobiles and steel.
Mexico has argued that the current tariff regime leaves its auto sector at a disadvantage compared to countries such as Japan and Korea, which struck top-line trade pacts with the US to slash their auto tariffs to 15%.
Right now, Mexican and Canadian auto exports to the U.S. face a 25% tariff on the non-U.S. portions of the vehicle. Auto parts exports aren’t facing the same sort of levy, but the government has reportedly threatened to apply a similar one.
Apparently, Trump has discussed privately whether or not the U.S. should exit the pact, but he has yet to publicly threaten to do so in his second term in office. Back in his first term (which is when the above picture was taken — can you believe how old he’s gotten?), he regularly made such threats during negotiations.
