Connor Simmons
The United States is expected to declare on Wednesday, July 1, that it will not extend the U.S. Mexico Canada Agreement, setting off a decade long process that could eventually let North America's free trade zone expire in 2036. The announcement does not end the pact immediately, but it does open a lengthy and uncertain review period.
At a Glance
- The U.S. is set to decline formal extension of USMCA on July 1, 2025.
- A six year review period begins, part of a sunset clause built into the original deal.
- Annual reviews would follow for a decade if no agreement is reached, with expiration possible on July 1, 2036.
- U.S. Trade Representative Jamieson Greer has scheduled a third round of talks with Mexico for the week of July 20.
- Trump has repeatedly said he prefers tariffs on Mexican and Canadian autos, steel and aluminum over renewing the agreement.
What the Sunset Clause Actually Triggers
USMCA, now 32 years removed from its predecessor NAFTA in spirit if not in years, was built with a built in expiration mechanism. Trade officials from Washington, Mexico City and Ottawa are expected to hold a virtual meeting Wednesday to decide whether to extend the agreement for another 16 years. Declining to do so does not kill the pact overnight. Instead, it starts a six year review window, followed by annual check ins for ten years, with a hard expiration date of July 1, 2036 if the three governments never reach consensus.
Greta Peisch, a former USTR general counsel now practicing trade law at Wiley Rein in Washington, said the outcome was largely expected. She noted that July 1 would likely pass without the U.S. confirming any wish to extend, and that it remains unclear how publicly detailed the administration will be about what changes it actually wants.
Autos, Content Rules and China Loom Over Talks
The bigger fight is not really about the calendar. It is about what the three countries demand from each other going forward. The U.S. side has pushed sweeping requirements to raise the share of automotive content made in the U.S. and the broader region, along with new trade protections meant to stop Chinese goods from entering North American supply chains through the side door of USMCA preferences.
Greer has already booked a third round of negotiations with Mexican officials for the week of July 20, a sign that Washington intends to keep pressing on these issues regardless of what Wednesday's declaration says. Separate from the sunset and review process is a termination clause that lets any of the three leaders, Trump included, pull the U.S. out of the agreement entirely within six months if they choose to invoke it. That option remains on the table independent of whatever happens with the extension decision.
Trump's Shifting View of the Deal He Signed
It was Trump's first administration that negotiated USMCA to replace the original 1994 North American Free Trade Agreement, and he called its 2020 launch the fairest and most balanced trade deal the country had ever signed. That enthusiasm did not last. As the U.S. goods trade deficit with Mexico grew, partly because companies rerouted supply chains away from China once Trump's earlier tariffs on Chinese goods took hold, his tone changed.
These days Trump talks openly about not wanting to renew USMCA at all. He has instead leaned on steep tariffs targeting Mexican and Canadian autos, steel and aluminum, treating them as a preferred tool over the negotiated framework his own administration built.
Frequently Asked Questions
Does declining to extend USMCA end the agreement immediately?
No. It starts a six year review period, and if no revisions are agreed, annual reviews continue for a decade before the agreement could expire on July 1, 2036.
What is the difference between the sunset clause and the termination clause?
The sunset clause governs the scheduled review and possible expiration process. The termination clause is separate and lets any of the three countries' leaders withdraw from the pact within six months if invoked.
What changes is the U.S. pushing for in the talks?
Washington wants higher U.S. and regional content requirements in North American auto production and stronger protections against Chinese goods entering the trade zone through Mexico or Canada.
When is the next round of negotiations scheduled?
U.S. Trade Representative Jamieson Greer has scheduled a third round of talks with Mexico for the week of July 20.
What Comes Next for North American Trade
Wednesday's announcement is unlikely to resolve much on its own. It formalizes a process rather than a conflict, leaving the real disputes over autos, content rules and China focused protections to play out in the negotiating rounds ahead. With Greer already back at the table this month and Trump's own preference for tariffs well known, the coming weeks will say more about USMCA's future than the sunset declaration itself.
Chris Wood
Sarah Ross