Insights

On July 1, 2026, U.S. Trade Representative Jamieson Greer announced that the United States, Mexico, and Canada failed to reach an agreement to renew the United States-Mexico-Canada Agreement (“USMCA”) in its current form following recent negotiations. Greer stated that “the United States did not agree to renew the USMCA in its current form.”

The announcement follows President Trump’s June 10 statement that he is “not looking to renew” the USMCA. The agreement, which governs trade among the United States, Mexico, and Canada, allows nearly $2 trillion in goods and services to move across North America each year, largely duty-free.

Although the failure to reach a renewal agreement creates uncertainty, it does not mean that the USMCA will immediately disappear. Instead, the agreement remains in effect, and the current rules governing trade among the three countries will continue to apply while negotiations proceed. In practical terms, businesses and importers will continue operating under the existing USMCA framework for now, but without the long-term certainty that a formal renewal would have provided.

What Happens Now

Under the USMCA’s review mechanism, if the parties do not agree to extend the agreement during the required periodic review, they must hold annual joint reviews until they either reach consensus to renew the agreement for a new 16-year term or allow it to expire as scheduled in 2036.

Since the parties failed to reach a renewal agreement during the 2026 joint review, the USMCA now enters a period of annual reviews. The three countries will have to revisit the agreement each year as they attempt to resolve outstanding issues, including U.S. concerns about trade deficits and specific disputes with Mexico and Canada. If no agreement is reached over the next decade, the USMCA will eventually expire in 2036.

Importantly, according to news sources, a senior Trump administration official stressed that the White House does not intend to continue negotiations for the full 10 years, suggesting that the administration may seek a faster resolution rather than allowing the review process to continue indefinitely.

One possible outcome is that the parties continue operating under the status quo while negotiating targeted changes to the agreement. This would preserve the existing trade framework while giving the United States, Mexico, and Canada time to resolve disputes over issues such as automotive rules of origin, market access, Chinese investment and transshipment concerns, and other trade security priorities.

Another possible outcome is that the Trump administration may pursue separate bilateral negotiations with Mexico and Canada rather than one comprehensive trilateral renewal. This would be less disruptive than a full withdrawal, while still allowing the administration to seek country-specific commitments from each trading partner.

A full U.S. withdrawal remains possible, but it appears less likely given the agreement's economic importance. Under the terms of the USMCA, a party may withdraw by providing written notice, with withdrawal taking effect after a six-month notice period. However, it remains unclear to what extent the President would require congressional support to withdraw from the agreement, especially if withdrawal or renegotiation would require changes to U.S. law.

According to senior administration officials, congressional approval would be needed only if negotiations require changes to U.S. law. For example, if Mexico or Canada agrees to lower a trade barrier or makes a unilateral commitment, the administration may treat that as a negotiated result that does not require congressional action. By contrast, if the United States agrees to change tariff rates, customs procedures, or other parts of the USMCA that are set by U.S. law, congressional approval would likely be required. Exporters and companies should therefore be aware that any changes affecting U.S. legal requirements will likely involve a formal review process in Congress.

Conclusion

The next phase of negotiations is expected to begin soon. During the week of July 20, the United States is scheduled to begin a bilateral USMCA negotiating round with Mexico in Mexico City. A senior administration official noted that these talks may focus on economic and trade security concerns related to China, rules of origin for automobile industry goods, and industrial goods trade.

Furthermore, Mexican Economy Minister Marcelo Ebrard emphasized that “protecting our automotive industry” will be Mexico’s main focus in these talks. The automotive sector is especially important because vehicles and auto parts often cross North American borders multiple times during production, assembly, and sale.

Overall, while the failure to renew the USMCA in its current form creates uncertainty, a full withdrawal remains less likely. The chief U.S. economist at Oxford Economics noted that “There’s only a slim chance that the Trump administration would trigger the six-month exit clause and pull out of the USMCA entirely, given the prohibitively large costs this would impose on US investment and trade.”

For now, the most immediate consequence is not termination; USMCA remains in effect, but the parties will now enter into annual reviews and continue negotiations. Businesses that rely on North American supply chains should continue to closely monitor the review process, especially for potential changes affecting tariff treatment, automotive rules of origin, and customs procedures.

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The attorneys at Torres Trade Law, PLLC regularly assist U.S. and foreign companies with matters involving customs, tariffs, trade agreements, trade compliance, and national security-related trade measures. If you have questions about how ongoing USMCA negotiations may affect your company’s import/export operations, tariff treatment, rules of origin compliance, supply chain structure, or broader North American trade strategy, please contact us for assistance.