US Rejects 16-Year USMCA Extension, Sets Annual Reviews

The United States has declined to renew the USMCA for a full 16-year term, triggering a mandatory 10-year cycle of joint annual reviews rather than an automatic extension to 2042. The decision preserves current tariff-free access and trade rules in the near term but extends regulatory uncertainty for Mexican exporters, particularly in steel, aluminum and automotive manufacturing already affected by Section 232 tariffs. With Mexico as the top US trading partner and 85% of its exports entering tariff-free, the outcome shapes investment and nearshoring decisions across North American supply chains ahead of further bilateral talks starting July 20.

The United States will not renew the USMCA for another 16-year term, US Trade Representative Jamieson Greer said, setting the trade pact on a path of mandatory annual reviews for the next decade rather than an automatic extension to 2042.

Greer's announcement came after a virtual meeting on July 1st, between the USTR, Minister of Economy Marcelo Ebrard and Canada's minister responsible for Canada-US trade, intergovernmental affairs, internal trade and the Canadian economy, Dominic LeBlanc. The session fulfilled a requirement under Article 34.7 of the USMCA, which took effect July 1, 2020, obligating the three governments to state their positions on the agreement's future by its sixth anniversary.

"The United States did not agree to renew the USMCA in its current form. As a result, the USMCA will not be renewed. The United States will continue engaging with Mexico and Canada to address the treaty's shortcomings and our trade deficits with these countries," Greer said in a statement. He added that the agreement "remains in force until these matters are resolved or until its termination," and confirmed Washington will meet Mexico the week of July 20 for a third round of bilateral talks tied to the joint review.

Under the treaty's terms, if all three parties had confirmed their intent to continue, the pact would have remained in force for another 16 years. Because the United States declined to do so, the three countries must now conduct joint annual reviews for the next 10 years, after which the agreement would expire automatically unless renewed. Ebrard and LeBlanc had proposed extending the USMCA for 16 years during the meeting, but Greer told them Washington was "not in a position" to do so.

"Tomorrow, July 2, the treaty will keep working as planned; there would be no modification. And trade between Mexico and the United States is primarily conducted under that treaty, which will remain in force for the next 10 years," Ebrard said in a video message posted on X. He said the goal going forward is to reduce the number of pending issues with each annual review. "The treaty continues; it was set to run through these days, these coming months, without changes for now," he said.

Ebrard characterized the outcome as providing continuity rather than uncertainty. "We are not in a rush, but we are also not interested in prolonging uncertainty, and that is why we must try to reach agreement on the many issues we have been working on for months," he said. 

Greer cited unresolved "deficiencies" in the agreement and persistent US trade deficits with Mexico and Canada as the basis for declining the 16-year renewal. 

Trade data released alongside the announcement showed Mexico remained the top US trading partner in goods from January through April this year, accounting for 16.4% of total US trade flows, ahead of Canada at 12.4% and China at 6.1%. Mexican exports to the United States totaled US$188.72 billion in that four-month span, up 9.1% year over year, while Canadian exports to the US fell 8.1% to US$126.62 billion and Chinese exports dropped 37.1% to US$80.66 billion. US exports to Mexico reached US$128.61 billion in the period, a 14.9% increase, leaving the US goods trade deficit with Mexico at US$60.11 billion, down 1.7% from the same period in 2025.

The outcome had been anticipated for months. Mexican officials had signaled as early as May that a clean 16-year extension was unlikely, with Ebrard telling reporters the review would probably lead to "non-conclusive reviews over the next 10 years." Two formal negotiating rounds preceded the deadline: the first held in Mexico City May 27-29, and the second in Washington June 15-17, focused on rules of origin for industrial goods, economic security, and preliminary talks on agriculture, labor and environmental provisions. The second round produced an agreement to create a committee tasked with reviewing implementation of the treaty's sectoral annexes.

Mexico's private sector has broadly supported preserving the agreement. A national consultation covering all 32 states and 573 companies and associations found 84% of respondents rated the USMCA's impact as positive or very positive, with priorities centered on defending existing rules of origin, preserving tariff-free market access and strengthening dispute resolution. Mexico's Ministry of Economy has projected exports could reach US$700 billion in 2026, a figure that depends on maintaining preferential access to the US market; roughly 85% of Mexico's US-bound exports currently enter tariff-free under the USMCA framework.

The United States has raised roughly 60 issues with Mexico during the review process, about double the number raised with Canada, while Mexico has presented 12 demands of its own. Sectors including steel, aluminum and automotive trade have already absorbed the impact of Section 232 tariffs, which cut Mexico's steel exports to the US by 36.6% in 2025 and contributed to a 5.1% year-over-year decline in automotive exports through April, to US$48.64 billion.