The president who once boasted about replacing NAFTA now says he’s “not looking to renew” the very trade agreement he negotiated, throwing $1.9 trillion in annual commerce with Canada and Mexico into chaos.
Wednesday marks the six-year renewal deadline for the U.S.-Mexico-Canada Agreement, and instead of celebrating a smooth extension, American businesses are bracing for what one expert calls “a lot of drama this summer.”
“There’s going to be a lot of drama this summer,” Diego Marroquin Bitar, a fellow in the America’s program at the Center for Strategic and International Studies, said last week at a USMCA forum sponsored by the Cato Institute.
The stakes couldn’t be higher for everyday Americans. The United States trades roughly $5 billion worth of goods and services with its neighbors every single day. Canadian auto parts feed Midwest factories. Mexican tequila fills glasses from Seattle to Miami. Beach resorts in Cancun welcome tourists from Tennessee. Canada and Mexico have now surpassed China as America’s top two trading partners.
Yet President Trump declared in June that he was “not looking to renew” the pact. “We don’t need anything that they have,” he said.
That kind of talk has businesses on both sides of both borders rattled. After a year of chaotic tariff policies, many companies were hoping the renewal process would restore some stability to North American commerce. They’re not likely to get their wish.
The path forward is lined with landmines.
U.S. negotiators are pushing demands that could effectively force Canada and Mexico to surrender some automaking production to American factories. That might mean more manufacturing jobs stateside, a win for workers in Michigan and Ohio. But it would also tear apart established supply chains built over three decades and could push car prices even higher. New vehicles already average nearly $50,000, and American families are already fed up with the high cost of living.
Nothing dramatic will happen Wednesday, according to Oscar Ocampo, director of economic development at the Mexican Institute for Competitiveness. Negotiators could simply agree to extend the USMCA as written for another 16 years, until 2042. But that outcome is considered highly unlikely.
Instead, the three countries are expected to keep working on revisions. They have until 2036, when the current term expires, to hammer out changes. If they fail, the whole agreement disappears.
Here’s what makes businesses nervous: any USMCA country can pull out with just six months’ notice. Canada and Mexico, both heavily dependent on American trade, worry Trump might actually do it.
Ocampo suspects the president’s tough talk is more strategy than substance. He believes Trump wants to use the uncertainty as leverage to pressure Mexico on security and immigration issues rather than actually abandoning the treaty.
The USMCA replaced the 1994 North American Free Trade Agreement in 2020. Trump and other critics had long called NAFTA a job killer because it encouraged American companies to relocate factories to Mexico, where they could exploit cheaper labor and ship products back north duty free.
His replacement deal ended up similar to NAFTA but included provisions pressuring factories to pay higher wages and ensure more products actually originated in North America. That was designed to stop Chinese goods from slipping across regional borders without tariffs.
So far, the United States and Mexico have held preliminary talks on renewal. Canada, notably, has been left out in the cold.
For American workers, farmers, and factory owners, the coming months will determine whether North American trade remains relatively stable or descends into another round of uncertainty and economic disruption.
