Washington D.C. – President Donald Trump is privately questioning the future of the USMCA trade agreement with Mexico and Canada, raising concerns about potential economic repercussions for all three nations. While a full withdrawal remains unlikely, the possibility is being actively considered as the July 1, 2026, deadline for a joint review approaches, according to sources within the White House.
The internal debate within the Trump administration centers on securing more favorable terms for the United States. U.S. Trade Representative Jamieson Greer has stated that automatically approving the 2019 agreement’s terms is not in the country’s best interest. The administration intends to keep the option of withdrawal open to address specific trade issues, signaling a willingness to renegotiate or potentially abandon the trilateral pact.
Experts suggest a complete withdrawal, while a possibility, is improbable due to the high level of economic integration between the three countries, particularly within the automotive supply chain. A sudden departure would be economically prohibitive, and the administration is likely mindful of the potential impact on its relationships with both Canada and Mexico, especially with U.S. Midterm elections scheduled for November.
However, the path forward isn’t without potential friction. Greer has indicated that conversations with Canada have been more complex than those with Mexico. Canada was notably absent from a recent U.S.-Mexico action plan concerning critical minerals, unveiled by the USTR on February 4, 2026, further highlighting the strained dynamic.
Mexico, appears to be on firmer footing. Analysts believe that Mexican President Claudia Sheinbaum will likely maintain a pragmatic approach, continuing to address U.S. Concerns in various policy areas to appease Trump and avoid higher tariffs. This strategy has proven effective thus far, resulting in relatively low tariffs for Mexican exports.
The USMCA requires all three nations to confirm an extension in writing by the July 1, 2026, deadline to secure the pact for another 16 years. Failure to reach an agreement will trigger a period of mandatory annual reviews for 10 years, potentially leading to the agreement’s expiration in 2036. Any country can also announce its intent to withdraw with six months’ notice.
Should the U.S. Choose to withdraw, experts suggest it might include exceptions for key sectors like vehicles, energy, and minerals. This could be a tactic to pressure Canada specifically, given Trump’s history of contentious interactions with both former Prime Minister Justin Trudeau and current leader Mark Carney, who have previously challenged Trump’s policies.
Even if the U.S. Were to announce its withdrawal, the process would be lengthy and potentially reversible. Without a consensus extension by July 1, 2026, a series of reviews would commence, meaning a formal withdrawal could take months, if not years. It’s possible that a single partner – most likely Mexico, given its stronger bilateral relationship with the U.S. – could maintain preferential access to the U.S. Market.
The USMCA currently provides tariff-free access for Canadian and Mexican products entering the United States, a benefit that would likely be lost upon withdrawal, replaced by the standard U.S. Most Favored Nation (MFN) tariffs, which average around 3.5 percent. While the average impact would be moderate, certain sectors, such as textiles and some agricultural products, could face more significant tariff increases.
Since 2025, Trump has already imposed substantial tariff increases, and the provisions of the USMCA have become crucial for exporters in both Canada and Mexico. For example, tariffs related to fentanyl were initially applied to all exports from Mexico and Canada in March 2025, but products compliant with USMCA rules – approximately 90% of Canadian exports – were subsequently exempted.
The ongoing joint review process provides the U.S. With an opportunity to seek concessions from both Canada and Mexico, particularly regarding rules of origin. The administration may also consider increasing tariffs on products not covered by the USMCA, mirroring previous actions taken against Canada. Analysts believe Trump recognizes the potential costs of withdrawing from the USMCA and may pursue alternative means to achieve U.S. Economic objectives.
