United States-Mexico-Canada Agreement (USMCA)

The Canada–United States–Mexico Agreement, known as the North American Free Trade Agreement in Canada and as the United States–Mexico–Canada Agreement (USMCA) in the United States, is a free trade agreement that entered into force on 1 July 2020 between Canada, the United States and Mexico.^【1】 The agreement replaced the North American Free Trade Agreement (NAFTA), which had been in effect since 1994.^【2】 Due to its structure, which requires the parties to conduct a joint review six years after its signing, the USMCA entered its first formal review process on 1 July 2026.^【3】

The renegotiation process of NAFTA was initiated in August 2017 at the request of United States President Donald Trump.^【4】 The new agreement that emerged from these negotiations was signed on 30 November 2018 at the G20 Summit in Buenos Aires by Trump, then Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto. The agreement entered into force on 1 July 2020 after all three countries completed their ratification processes.^【5】

The USMCA covers annual trade of approximately USD 1.6 trillion among the three parties, contributes to the integration of the North American automotive sector and supports millions of jobs in the region.^【7】 The agreement governs a region encompassing approximately 510 million people.^【8】 According to data from the United States Trade Representative (USTR), total U.S. merchandise and services trade with USMCA countries reached USD 1.8 trillion in 2022, with exports accounting for USD 789.7 billion and imports for USD 974.3 billion.^【9】 In the same year, the U.S. stock of foreign direct investment in USMCA countries was recorded at USD 56.9 billion.^【10】

The agreement is designed to expire on 1 July 2036, 16 years after its signing, unless the parties agree to an extension.^【11】

^{ABD ile Meksika bayrakları -} (Anadolu Ajansı)

Among the issues expected to be addressed in any future renegotiation are the imposition by the United States of minimum U.S. content thresholds in the automotive sector, the application of tariff-rate quotas on agricultural and industrial products by Mexico and Canada, the strengthening of rules of origin and the raising of minimum wage thresholds to narrow the scope of products eligible for preferential tariff treatment. According to CSIS reports, these adjustments have the potential to reduce legal uncertainties but will directly affect the production costs, regional competitiveness, inflation rates and employment data of the three countries, as well as shape trilateral cooperation in areas such as security, migration and border management.

Article 32.10 of the agreement restricts the parties from entering into free trade agreements with non-market economy countries (such as China); however, this article does not directly regulate national security procedures related to increasing Chinese investment. Currently, the United States uses the Committee on Foreign Investment in the United States (CFIUS) to screen incoming investments for security risks, Canada employs mechanisms under the Investment Canada Act, and Mexico has no yet established a national security review framework in this scope. Strategic analyses emphasize the possibility of establishing a coordinated trilateral or regional investment screening mechanism with common criteria for sensitive investments, rather than relying on unilateral tariffs or restrictions.^【12】

Article 34.7 of the agreement obliges Canada, the United States and Mexico to conduct a formal review six years after its entry into force.^【13】 This process requires the three governments to evaluate the agreement’s effectiveness through the Free Trade Commission, consider each country’s proposals and reach agreement on necessary actions, which include extending the agreement for another 16 years or allowing it to expire in 2036. Each country may gather input from stakeholders including businesses, unions, non-governmental organizations, legislators and local governments.^【15】

The text of the relevant article does not include detailed subheadings on how the Commission should prioritize its recommendations or how to distinguish between technical implementation assessments and the renegotiation of fundamental provisions. This ambiguity creates a legal basis for the parties to introduce broader demands during the process.

As of 1 July 2026, the parties face three options: extending the agreement for another 16 years to 2042; continuing annual reviews until the agreement expires if no consensus is reached; or one party withdrawing from the agreement after providing six months’ prior notice.^【16】 Under Article 34.6 of the agreement, any party has the right to withdraw from the agreement with six months’ notice, independently of the review process.^【17】

Following the initiation of the review process, the United States, Canada and Mexico have conducted separate bilateral negotiations.^【18】 It is believed that negotiations between the United States and Mexico have advanced further than those between the United States and Canada.^【19】

The first round of U.S.-Mexico negotiations took place in Mexico, where automotive rules of origin, steel and aluminum, and economic security issues were prioritized.^【20】 During the same round, both countries acknowledged the importance of enhancing regulatory alignment in sectors such as medical devices, pharmaceuticals and cosmetics.^【21】 The USTR statement emphasized that the United States continues to stress the importance of ensuring that the USMCA benefits American producers, farmers, workers and businesses of all sizes while preventing unfair exploitation by third countries.^【22】

The second round was held in Washington on 16–17 June 2026, during which the parties made progress on rules of origin for industrial products and economic security, and began conceptual discussions on agriculture, labor rights and the environment.^【23】 The parties also agreed to establish a committee to review Annex 12 of the agreement (Sectoral Annexes) to enhance regulatory alignment.^【24】 The third round is planned for the third week of July in Mexico City. ^【25】

In Canada, negotiations have been conducted between Canadian Minister of International Trade Dominic LeBlanc and U.S. Trade Representative Jamieson Greer.^【26】 U.S. demands toward Canada include greater access to Canada’s dairy market, the elimination of Canadian digital services taxes applied to major U.S. media platforms and the cessation of American alcohol boycotts implemented by certain Canadian provinces in response to U.S. tariffs.^【27】 The United States has also demanded, in its negotiations with Mexico, that vehicles produced in North America contain at least 50 percent U.S. content; this has led to assessments that a similar demand may be made of Canada.^【28】 Canadian Prime Minister Mark Carney noted that Canadian-built vehicles already contain an average level of U.S. content close to this threshold.^【29】

U.S. President Donald Trump has made conflicting statements regarding the review process on various occasions. During a visit to Detroit in January 2026, he characterized the agreement as “irrelevant”.^【30】 During the same visit, he stated that the United States does not need vehicles produced in Canada or Mexico and wants production to return to the United States.^【31】

Following a signing ceremony in the Oval Office in June 2026, he stated that he had “no intention of renewing” the agreement, labeled NAFTA as “the worst trade deal ever made”, and presented the USMCA as an improvement upon that structure.^【32】 Trump stated, “We have no need for anything Canada and Mexico have, but they need everything we have,” arguing that the United States runs a trade deficit with both countries.^【33】 He emphasized that the key feature making the agreement “better” was the right to terminate it.^【34】

U.S. Trade Representative Jamieson Greer attributed the slower progress in U.S.-Canada negotiations to Canada’s retaliatory measures against U.S. tariffs, stating, “There are two countries in the world that retaliate against us: the People’s Republic of China and Canada.”^【35】 In June 2026, Trump shared a news article on Truth Social about Canada’s economic stagnation and reiterated the phrase “51st state.”^【36】

In June 2026, Canada officially requested a 16-year extension of the agreement. LeBlanc described the USMCA as “extremely beneficial” in communications to counterparts in the United States and Mexico, noting that the agreement provides North American countries with a competitive advantage in global markets. Canada acknowledged that there are areas for improvement within the agreement and expressed openness to evaluating proposals that could benefit the long-term prosperity of the three nations. LeBlanc also noted that parallel discussions on sectoral tariffs are ongoing with the United States.^【37】

Prime Minister Carney has called for the removal or reduction of U.S. sectoral tariffs on Canadian steel, aluminum, automobiles and lumber, emphasizing that Canada is not willing to sign a bad deal.^【38】 Ahead of the trilateral meeting in July 2026, he stated he did not expect an agreement to be reached, saying, “What I see with the President is: you are not close to an agreement, then you make an agreement.”^【39】 Carney noted that it is “no secret” that Trump dislikes the USMCA, but observed that U.S. negotiators have acknowledged the fundamental soundness of the agreement’s structure.^【40】 In a speech to the business community in New York, he argued that a strong Canadian economy supports growth in the United States.^【41】

In October 2025, U.S. Ambassador to Canada Pete Hoekstra reported that a basis for compromise between Canada and the United States had been sought, but that the process was affected by an anti-tariff advertisement aired by Ontario on American channels. The Carney government has faced criticism from opposition MPs based on Canada’s economic growth data and youth unemployment rates.^【42】

Mexico has also formally called for the renewal of the agreement. Minister of Economy Marcelo Ebrard stated that Mexico’s position supports extending the agreement, affirming that it will remain in force in the coming years and that Mexico seeks a 16-year extension.^【43】

Among the main issues raised during the review process are automotive rules of origin and the minimum U.S. content requirement, U.S. tariffs on steel, aluminum and automobiles, Canada’s access to its dairy market, digital services taxes applied to U.S. media platforms, American alcohol boycotts in certain Canadian provinces and preventing third countries — particularly China — from indirectly benefiting from tariff exemptions under the agreement.^【44】 The United States has indicated that its list of demands toward Mexico is more comprehensive than those toward Canada.^【45】