The Trump administration has begun to weigh up the future of its largest trade deal, which governs hundreds of billions of dollars in goods flowing between the US, Canada and Mexico.
The United States–Mexico–Canada Agreement signed by Donald Trump in 2020 is due for review next summer, but US officials will on Wednesday publish a formal call for comments from American businesses ahead of a potential renegotiation. The notice follows months of trade tensions between the US and its two largest trading partners after the president imposed steep tariffs on them earlier this year.
Trump has implemented tariffs of 50 per cent on steel and aluminium imports from Canada and Mexico, and rattled the automotive industry with extra levies of 25 per cent on some cars and car parts. Washington has also applied a general tariff of 25 per cent on all imports from Mexico that do not comply with the terms of the USMCA, with a bigger tariff of 35 per cent on goods from Canada that do not comply. On Thursday, Canadian Prime Minister Mark Carney flies to Mexico to meet President Claudia Sheinbaum, with the USMCA review expected to top their agenda. “In the face of a shifting global landscape, we are focused on elevating our partnerships in trade, commerce, security and energy,” Carney said in a statement on Tuesday.
In a statement to the Financial Times, Dominic LeBlanc, Canada’s top trade official with the US, said Ottawa would be “launching public consultations in the near future” for feedback on the review. Periodic reviews were written into the 2020 deal, with Mexico and Canada hoping one scheduled for 2026 would be largely procedural, but officials are concerned that Trump will use it to back out of the agreement. The notice published by US Trade Representative Jamieson Greer on Tuesday set a public hearing for November to take evidence on whether the country should continue with or leave the USMCA. The USTR has to make a recommendation on whether to extend the pact by January, although any party can also withdraw with six months’ notice at any time.
The North American car industry, which has supply chains across the continent, is expected to be the main topic for any potential negotiation. US officials have long been concerned that foreign content, particularly from China, is entering the American market with low tariffs through vehicles made in Mexico.