HOUSTON — The Trump administration said it will not renew the United States-Mexico-Canada Agreement in its current form, signaling plans to renegotiate the trade pact with Mexico and Canada before it expires in 2036.
U.S. Trade Representative Jamieson Greer announced the decision and said the United States will continue discussions with Mexico and Canada to address concerns over the agreement.
“The United States will continue to engage with Mexico and Canada to address the agreement’s shortcomings and our trade deficits with these countries,” Greer said. “However, the agreement remains in force pending resolution of these issues or until the agreement’s termination.”
Greer said U.S. officials will meet with Mexican counterparts during the week of July 20 for a third round of bilateral negotiations as part of the agreement’s joint review.
Former President Donald Trump negotiated the USMCA during his first term to replace the North American Free Trade Agreement. The agreement is scheduled to expire on July 1, 2036.
Among the issues under discussion are the administration’s proposal to impose higher tariffs on imports from Mexico and Canada and increase the required U.S. content in vehicles manufactured within the three-country trade area.
Tony Payan, director of the Claudio X. Gonzalez Center for the U.S. and Mexico at Rice University’s Baker Institute, said the administration is seeking to encourage more manufacturing in the United States.
“Moving well into his second year, that has not happened,” Payan said. “In fact, the U.S. has lost manufacturing jobs. Companies are withholding their investment.”
Payan also said the negotiations involve national security issues, including U.S. interest in Arctic shipping routes with Canada and continued cooperation with Mexico against organized crime.
Texas, the nation’s largest exporting state, counts Mexico and Canada as its two largest international trading partners.
Garrick Taylor, spokesman for the Border Trade Alliance, said more than one million Texas jobs depend on exports. He added that imports also support employment in logistics, warehousing and customs brokerage while helping lower costs for consumers.
Payan said Texas’ close economic ties with Mexico may help cushion the state from potential disruptions if the agreement expires. However, he said shifting manufacturing from Mexico to the United States could increase production costs.
“If there’s a company that’s thinking about a manufacturing plant in Aguascalientes, because they can produce more cheaply there, and then now they have to think about Alabama, they’re going to have to charge prices according to what it costs to produce in Alabama,” Payan said. “So, for the consumer, it may actually mean higher prices, fewer jobs, less investment.”