Trump lets the $2 trillion North American deal lapse without renewal

Introduction: a missed date with trade history

July 1, 2026, a date that was supposed to change everything

July 1, 2026, marked the deadline set by the United States-Mexico-Canada Agreement, or USMCA, for the three signatory countries to collectively decide its future. According to the Office of the United States Trade Representative, the United States, Canada, and Mexico met virtually that day to conduct the mandatory joint review required by the treaty, but no renewal agreement was reached.

U.S. Trade Representative Jamieson Greer summed up the American position bluntly: "The United States has not agreed to renew the USMCA in its current form. As a result, the USMCA is not renewed," a statement that immediately raised alarm across North American business circles.

A $2 trillion agreement left hanging

The USMCA, which took effect on July 1, 2020, replacing the 1994 NAFTA, governs North American trade flows valued at roughly 2 trillion dollars annually. The American refusal to renew it in its current form plunges this continental trade architecture into an extended zone of uncertainty, without triggering its immediate collapse.

The legal mechanism that avoids immediate collapse

A decade-long reprieve in the form of annual reviews

Despite the lack of renewal, the USMCA doesn't disappear overnight. The agreement provides that, absent consensus, it remains in force but becomes subject to annual reviews for a decade, before its scheduled expiration in 2036. This mechanism, laid out in Article 34.7 of the treaty, was inserted during the initial negotiations led by Greer himself during Trump's first term.

This annual review clause turns an agreement meant to provide long-term stability into a diplomatic exercise repeated every year, creating persistent uncertainty for businesses that depend on North American supply chains to plan their investments.

The options available to the three countries

Under the terms of the agreement, the governments had three options: renew the USMCA for 16 more years, withdraw from the agreement entirely with six months' notice, or proceed without formal renewal, which triggers the very cycle of annual reviews until its 2036 expiration. Washington effectively chose this third path, without explicitly announcing it as a deliberate strategic choice.

This default approach, rather than a firm decision, illustrates an erratic trade negotiation method that leaves North American partners in limbo rather than in a stable, predictable contractual relationship.

American grievances: trade deficits and structural gaps

The persistent trade deficit narrative

The Trump administration justifies its refusal to renew by pointing to persistent substantial trade deficits with Canada and Mexico, a recurring argument in Trump's trade rhetoric since his first term. The USTR statement specifies that the United States will continue to engage with its two neighbors to correct what Washington calls structural gaps in the current agreement.

This insistence on trade deficits, however, ignores the agreement's documented benefits: according to Greer's own statements before Congress in December 2025, the USMCA drove a 56 percent increase in U.S. exports to Canada and Mexico, while doubling Mexican wages since 2020, results that heavily complicate the narrative of an agreement purely unfavorable to American interests.

An administration negotiating from apparent strength

Trump has already imposed, alongside this review process, new tariffs on steel, aluminum, and copper from Canada and Mexico, a tariff escalation that further complicates ongoing negotiations and fuels bilateral tensions with both North American partners.

This strategy of applying tariff pressure alongside trade negotiations illustrates the Trump administration's usual method: maximize negotiating leverage by imposing immediate costs, even at the risk of undermining the long-term trust of its closest trading partners.

The upcoming negotiation calendar

A third round with Mexico set for July 20

Despite the lack of agreement by July 1, negotiations aren't stopping: a third round of bilateral talks with Mexico is scheduled for the week of July 20, 2026, in Mexico City. This timeline confirms that Washington is favoring, at least for now, a separate bilateral approach with each of its two partners rather than a strictly trilateral negotiation.

This preference for separate bilateral talks with Mexico and Canada, rather than a unified trilateral format, reflects a negotiating strategy that could aim to isolate each partner in order to extract more favorable concessions in each relationship taken individually.

Canada, falling behind in the talks

Unlike Mexico, formal talks with Canada had not truly begun as of the information available at the time of writing. Greer had already publicly criticized Ottawa for lagging behind Mexico City in the progress of negotiations, a criticism that illustrates the persistent tensions between Washington and the Canadian government on several trade files, particularly the tariffs imposed by both sides.

This Canadian lag in bilateral negotiations could stem from deeper disputes between the two capitals, particularly over the reciprocal tariff measures Canada adopted in response to American duties on steel and aluminum.

The origin of the review mechanism: the legacy of Trump's first term

A clause inserted by Trump himself in 2020

It is worth recalling that the mandatory review clause after six years, the very one causing today's uncertainty, was inserted into the treaty by the Trump administration itself during the original USMCA negotiation in 2020, replacing the old 1994 NAFTA. This provision, presented at the time as a guarantee of continuous modernization of the agreement, is now backfiring against the very trade stability it was supposed to protect.

The fact that Jamieson Greer himself, the current Trade Representative, was one of the architects of this clause during Trump's first term adds an almost ironic dimension to the current situation: the architect of the uncertainty mechanism is now its chief executor.

An agreement once presented as a major victory

At its signing in 2020, the USMCA was presented by Trump himself as one of the greatest trade achievements of his first term, replacing a NAFTA deemed unfavorable to American interests with an agreement supposedly more balanced. The current refusal to renew this same agreement without deep additional modifications illustrates a striking strategic inconsistency in the administration's trade policy.

This reversal, from the celebrated triumph of 2020 to the prolonged uncertainty of 2026, raises questions about the long-term coherence of Trump's trade approach, which seems to favor permanent reconsideration over the contractual stability sought by North American economic circles.

Mexican reactions and Mexico City's relative optimism

Marcelo Ebrard and Mexico's displayed confidence

Mexican Economy Secretary Marcelo Ebrard had, as early as January 2026, expressed confidence in the strength of the trade pact despite Trump's displayed skepticism, stating that the three nations were on track to finalize an extension. This Mexican confidence, voiced under the authority of President Claudia Sheinbaum, contrasts with the final outcome on July 1, which produced no formal renewal.

Mexico nonetheless appears better positioned than Canada in the upcoming negotiation calendar, with a third bilateral round already scheduled for July 20, suggesting that Mexico City has managed to maintain a more active channel of dialogue with Washington than its Canadian counterpart.

Mexico's economic stakes in this review

Mexico has major economic reasons to want to preserve the USMCA's architecture: the agreement has helped double Mexican wages since 2020 according to figures cited by Greer himself, and a considerable share of the Mexican economy directly depends on the preferential access to the American market guaranteed by this trade treaty.

This Mexican economic dependence on the USMCA explains the relatively conciliatory posture adopted by Mexico City throughout the review process, an approach that appears to have so far avoided the open tensions observed in the relationship between Washington and Ottawa.

Economic uncertainty for North American businesses

Supply chains left hanging

For businesses that built their supply chains around North America's integrated trade architecture since NAFTA and then the USMCA, this prolonged uncertainty amounts to a direct brake on long-term investment decisions. A decade-long cycle of annual reviews means, in practical terms, that no company can plan its continental operations with total confidence in the stability of the applicable regulatory framework.

This uncertainty particularly affects the automotive, agricultural, and manufacturing sectors, historically the most integrated at the North American scale, where production chains frequently cross all three borders several times before a finished product reaches the end consumer.

The TN professional mobility program kept intact for now

One reassuring element remains: the TN professional visa program, along with other provisions related to labor mobility, business travelers, and investors, remains unchanged for now, according to clarifications from immigration law firms closely tracking this file. These provisions remain in effect until the 2036 expiration, barring changes during upcoming annual reviews.

This temporary preservation of professional mobility provisions offers partial relief to North American businesses that depend on the free movement of certain skilled workers among the three countries, even though uncertainty looms over the longer-term durability of these provisions.

The tariff tensions poisoning the talks

Steel, aluminum, and copper at the heart of the conflict

The tariffs imposed by the Trump administration on Canadian and Mexican steel, aluminum, and copper are among the main friction points complicating the conclusion of a renewal agreement. These tariff measures, justified by Washington in the name of national security and protecting American industry, are seen by Ottawa and Mexico City as violations of the spirit, if not the letter, of the trade agreement in force.

Trade Representative Greer himself publicly acknowledged, in statements reported by the Wall Street Journal in June 2026, that Canadian retaliatory tariffs constituted a major obstacle to progress in bilateral trade negotiations between the two countries.

A vicious circle of retaliatory measures

This reciprocal tariff escalation between the United States and its two North American neighbors illustrates a classic vicious circle of trade conflicts: each new American protectionist measure prompts a similar response from Canada or Mexico, making it all the harder to reach a renewal agreement built on mutual trust rather than permanent tariff confrontation.

Breaking this vicious circle will require clear political will from all three governments to defuse tariff tensions before any real renewal of the North American trade architecture can be achieved on calmer footing.

What this reveals about Trump's trade doctrine

Permanent confrontation as a negotiating method

This episode fits into a broader trade doctrine of the Trump administration, which systematically favors tariff confrontation and calculated uncertainty as negotiating levers, rather than the contractual stability traditionally sought in long-term international trade relations.

This approach, while it can occasionally produce one-off concessions from America's trading partners, carries a significant structural cost: it progressively erodes the trust of U.S. allies and economic partners, including ones as geographically and historically close as Canada and Mexico.

A striking contrast with American military posture

It's worth noting that this erratic trade approach contrasts sharply with the more consistent military posture Washington displays toward its NATO allies on the Ukraine file, where the administration continues broadly to support the architecture of collective Western defense. This duality between military firmness and trade instability illustrates the internal contradictions of an American foreign policy that varies sharply depending on the file being handled.

This difference in treatment between trade and military files raises legitimate questions about the overall coherence of the Trump administration's international strategy, which seems capable of consistency on certain geopolitical fronts while cultivating unpredictability on others, particularly economic ones.

The potential impact on North American consumers

Costs that eventually trickle down

The tariffs imposed in this trade standoff are never fully absorbed by importing companies: a significant share of these added costs typically ends up passed on to prices paid by American, Canadian, and Mexican consumers, particularly on manufactured goods using steel, aluminum, or copper as production inputs.

This economic reality, often overlooked in the political debate over the strategic merits of tariffs, is a reminder that the consequences of this trade impasse aren't limited to diplomatic relations between governments, but directly affect the purchasing power of citizens in all three countries.

The sectors most vulnerable to prolonged uncertainty

The construction, automotive, and appliance sectors, particularly dependent on North American steel and aluminum imports, are among the most exposed to the fallout from this prolonged trade uncertainty. These industries will have to contend with potentially higher production costs and reduced visibility into the future evolution of the applicable tariff framework for their supply chains.

This heightened sectoral vulnerability could, if it persists, dampen industrial investment in these sectors across the entire North American continent, a counterproductive effect for an administration that nonetheless claims to want to strengthen American manufacturing.

Congress's role in this trade file

A shared and contested constitutional authority

Whether the American president can unilaterally withdraw from a trade agreement ratified by Congress remains legally contested. Constitutional powers over international trade and treaties are explicitly granted to Congress, creating a legal gray zone should the Trump administration push its challenge of the current agreement any further.

This institutional tension between the American executive and legislative branches could, in the months ahead, give rise to further legal challenges if the annual review process were used by the White House to impose substantial changes without adequate consultation with Congress.

The December 2025 congressional hearings

In December 2025, Ambassador Jamieson Greer had already testified before the House Ways and Means Committee as well as the Senate Finance Committee, in accordance with legal requirements under the USMCA implementation law, ahead of the July 1, 2026, joint review. Those hearings had already hinted at American priorities focused on correcting persistent trade deficits.

The fact that these hearings took place several months before the final deadline shows that the current outcome, far from being a last-minute surprise, was largely anticipated by observers who had been closely tracking the evolution of American positions for months.

Historical precedents of North American trade tensions

From NAFTA to the USMCA, a history of renegotiations

North American trade history is dotted with similar periods of tension: NAFTA itself, signed in 1994, faced recurring criticism for more than twenty years before eventually being replaced by the USMCA in 2020. This new 2026 impasse thus fits into a broader cycle of periodic redefinitions of continental trade rules.

Each negotiation or review cycle has historically produced its share of temporary uncertainty before eventually reaching a compromise acceptable to all three parties. Nothing indicates, however, that the current cycle will necessarily follow the same path toward a quick compromise.

A trilateral relationship historically resilient despite tensions

Despite the recurring tensions observed for decades, the trilateral trade relationship between the United States, Canada, and Mexico has always eventually stabilized, driven by an economic interdependence so deep that a complete rupture remains, according to most analysts, highly improbable even in the current context of renewed tensions.

This historical resilience offers grounds for cautious optimism for North American businesses, even if it does not excuse the three governments from the urgency of quickly clarifying the terms of their future trade relationship.

The financial markets' attitude toward this uncertainty

A measured but watchful reaction

North American financial markets have, so far, reacted relatively calmly to the announcement of the USMCA's non-renewal, with investors seemingly treating this news as a predictable extension of trade tensions already observed for months rather than as a major, unforeseen shock.

This measured reaction should not, however, obscure deeper sectoral concerns expressed by certain industries particularly exposed to tariffs, notably the automotive and metals sectors, whose cross-border supply chains remain directly vulnerable to any new tariff escalation.

Economic analysts' warnings

Several economic analyses, including those published by major financial institutions, have warned that prolonging this trade uncertainty for potentially an entire decade could progressively erode North American industrial competitiveness relative to other global economic blocs, notably the European Union and certain Asian countries that benefit from more stable trade agreements.

These warnings highlight a strategic paradox: in seeking to correct trade deficits deemed unacceptable, the American administration could inadvertently weaken the overall competitive position of the North American continent against its true strategic rivals, notably China.

The stakes for North American workers and unions

Union concerns on both sides of the border

North American unions, on both the Canadian and American sides, are closely following the evolution of this trade file, aware that the USMCA's terms directly influence the investment decisions of major manufacturing companies and, therefore, the stability of tens of thousands of industrial jobs.

Several union representatives have expressed concern that a decade of uncertain annual reviews could push some companies to favor investments in countries offering more predictable regulatory stability, at the expense of North American workers directly affected by this trade hesitation waltz.

Mexico at the heart of wage concerns

The Mexican wage question remains central to these discussions, since one of the arguments repeated by Washington to justify its renegotiation demands is precisely the need to maintain the upward trend in Mexican wages that began in 2020, a social gain Jamieson Greer himself has publicly acknowledged before Congress.

This positive wage dynamic in Mexico remains fragile and could be jeopardized if the current trade uncertainty were to discourage the industrial investment that made it possible, a paradox few observers seem to have fully grasped in their analyses.

Conclusion: a North American relationship to reinvent

An agreement suspended between fragile stability and lasting uncertainty

The American refusal to renew the USMCA without deep modifications places the North American trade relationship in an uncomfortable gray zone: neither total rupture nor restored stability, but a decade of annual reviews that will maintain persistent uncertainty for businesses, workers, and consumers in all three countries.

Upcoming negotiations, particularly the third round scheduled with Mexico on July 20, will determine whether this period of uncertainty can lead to a more satisfactory renewal agreement for all parties, or whether it will settle in as the new normal of North American trade relations under this administration.

A test of American credibility with its closest neighbors

Beyond the immediate economic stakes alone, this trade impasse constitutes an important test of American credibility with its closest partners, both geographically and historically, at a moment when Washington is otherwise seeking to consolidate its leadership within the Western alliance against far more problematic geopolitical rivals than Canada or Mexico.

By Maxime Marquette, columnist

Columnist's transparency note

My critical position on this domestic file

I sign this profile as a columnist who views the Trump administration as a broadly positive actor on the military posture of the West against Russia, while taking a markedly more critical view of its handling of domestic economic and trade files, such as the USMCA. This distinction clearly shapes my analysis of this episode.

This analysis draws on official statements from the Office of the United States Trade Representative, as well as reports from The Washington Post, Al Jazeera, The Wall Street Journal, and Reuters. I am not a trained economist, and I rely on the figures and statements publicly reported by these sources.

What I cannot predict

I cannot predict with certainty the outcome of upcoming bilateral negotiations with Mexico and Canada, nor guarantee that current tariff tensions will ease in the months ahead. My analysis reflects the situation as it stood at the time of writing, in early July 2026.

Sources

Primary sources

USTR — Ambassador Greer issues statement on the USMCA joint review, July 1, 2026

Washington Post — Trump ignores deadline for extending USMCA, seeks improved deal, July 1, 2026

Secondary sources

Al Jazeera — U.S. says it won't agree to renew USMCA, July 1, 2026

The Guardian — Trump refuses to renew the trade pact he once championed, July 1, 2026

Atlantic Council — Trump tariff tracker

JPMorgan — Analysis of U.S. tariffs