By Simon Lester in USMCA Sunset/Review Clause — 03 Jun 2026 — Share

What To Expect from the USMCA Review?

The USMCA review is almost upon us. How exactly things will proceed is a bit unclear, as we've never done this sort of thing before, but July 1 is the six year anniversary of the USMCA's entry into force, and as Article 34.7.2 says: "On the sixth anniversary of the entry into force of this Agreement, the Commission shall meet to conduct a 'joint review' of the operation of this Agreement, review any recommendations for action submitted by a Party, and decide on any appropriate actions." So whatever is about to happen, it will start happening in a few weeks!

In this post, I'll go through some of the key issues I'm thinking about in the context of this review:

Will the USMCA be extended for another 16 year term?
What's the timing of the review process?
What are the main substantive issues being discussed?
Are separate bilateral deals really a possibility?
Where is Congress in all this?
What non-trade issues are kind of, sort of a part of these talks?
Will Canada and the U.S. find a way to be friends again?

To extend or not to extend

I don't want to make people wait, so let's start with the big question on everyone's mind. As part of the Article 34.7 "review and term extension" process, the USMCA "shall terminate 16 years after the date of its entry into force, unless each Party confirms it wishes to continue this Agreement for a new 16-year term ... ." So will the agreement be extended for another 16-year term as part of the upcoming review? I've been skeptical for a while and I'm still skeptical now, for the following reasons.

I've never been a trade negotiator, but from what I understand from those with direct experience, deadlines can be a useful way to force governments to come to agreement. Often this means setting somewhat arbitrary deadlines, just to get people moving, although in some cases you have an election in a particular country that you have to work around, so the deadline is more real.

In the USMCA review and extension context, we do have a deadline of sorts. The problem is, it's somewhat of a soft deadline, in the sense that not much happens if the parties don't extend the USMCA as part of the upcoming review. If they don't extend, the agreement stays in place for 10 more years, and they can just go on negotiating during that time, either though the annual reviews that follow or outside of them. As a result, the incentives for forcing the governments to make a decision to extend may not be there at the moment. Yes, the failure to agree on an extension will create some uncertainty, but 10 years is a long time and I'm not sure how much people will be panicking just yet.

To state the obvious here, the views within the U.S. – and in particular the Trump administration – are the most important on this point (Canada and Mexico would probably be happy to sign on to an extension that kept the agreement as is – Canada said as much here). But the Trump administration is looking to extract various additional concessions, and does not seem particularly eager to extend without getting something more. My instinct here is that the Trump administration might be willing to extend if they got everything they asked for, but they are asking for so much that I'm not sure Canada and Mexico can give it in terms of their own domestic politics.

Also, while there are U.S. companies with an interest in keeping the USMCA in place, and might put pressure on the Trump administration to do so, given the 10 years left on the current term these companies won't be sufficiently panicked yet. Instead, some of them may be happy to wait for a change in who is in charge in U.S. politics, thinking that this process might go better for them in those circumstances.

So my prediction is no extension in July or soon thereafter, but I make it with the same degree of certainty about anything in the policy world at the moment, which is to say very little!

(I need to add a parenthetical here about the possibility of a U.S. withdrawal. I can imagine this will be threatened from time to time, but I'd be very surprised if it actually happened. The chances are so low that I'm not even giving withdrawal its own section in this post!)

The timing of the review

As mentioned in the intro, July 1 is the six-year anniversary of the USMCA entering into force, and Article 34.7.2 tells us that on "[o]n the sixth anniversary of the entry into force of this Agreement, the Commission shall meet to conduct a 'joint review' of the operation of this Agreement, review any recommendations for action submitted by a Party, and decide on any appropriate actions." But what exactly does the timing look like here? Deputy USTR Jeffrey Goettman recently said "we'll make a decision on July 1." But presumably even if they make that decision on July 1 (and I can imagine it might see a bit of a delay), they are unlikely to wrap up everything with the USMCA review on that day, and we should give them some time to meet and discuss things further. The U.S. and Mexico have already scheduled a negotiating round "[d]uring the week of July 20," so it doesn't seem like a quick outcome is being anticipated.

If on July 1 (or shortly thereafter) they are not ready to agree to extend, and this is stated publicly, where do we stand then in terms of the likely timing going forward? Note that Article 34.7.4 seems to provide for an open-ended amount of talking even if there is no decision to extend:

... If one or more Parties did not confirm their desire to extend this Agreement for another 16-year term at the conclusion of a given joint review, at any time between the conclusion of that review and expiry of this Agreement, the Parties may automatically extend the term of this Agreement for another 16 years by confirming in writing, through their respective head of government, their wish to extend this Agreement for another 16-year period.

The "at any time" language provides a lot of leeway here. Let's say the parties get to July 28 or so and recognize that they won't reach an agreement to extend this time around. Well, presumably that would conclude the review, but the "at any time" language makes it sounds like the parties can still keep talking and at some later point – say, just before the midterm elections if someone wanted a political victory to announce – could decide to extend. So, if the parties end up going this route, we could see a continuous negotiation that lingers on and which could lead to a term extension decision at any time. Or things could just linger on without an extension or continuous negotiations, and we could end up with the annual joint reviews that Article 34.7 also provides for.

Summing up here, I feel like there's some uncertainty on the timing of key aspects of the review, and it's not clear to me what each of the three governments has in mind, whether they are all on the same page, and how things will proceed.

Main topics under discussion

Last December, U.S. Trade Rep. Jamieson Greer submitted to Congress a list of what the administration saw as the key issues in the USMCA review. Are these the issues the administration cares most about? Or are these issues just what the administration thinks Congress wanted to hear that they care most about? Hard to say! But certainly it's a good starting point for thinking about what the main topics of discussion will be.

At the outset, though, it's worth noting a broad objective in the USMCA review that reflects the administration's overall trade policy: A concern about trade deficits. As Greer put it at a CFR event in late May in response to the question "[w]hat is it that you want to see changed vis-a-vis Mexico?":

Well, President Trump is concerned about our deficit with Mexico. It has grown over the past. It's one of the few where their deficit has grown with us. So while our overall trade in goods deficit, ... Mexico has been one of the big winners of American diversification from China and Asia, right? They've been one of the big winners. So while our trade deficit in goods has gone down over the past 12 months, the share of imports from Mexico has gone up. They've taken some of that. All that being said, we would like to see a broader and more balanced distribution of that production, including in the United States. So what do we want to see? We want to see that deficit go down. I think that over the course of these negotiations, we are going to be talking about rules of origin in a way that enhances U.S. content in these goods.

Underlying the trade deficit issue, of course, is the Trump administration's goal of bringing manufacturing back to the U.S., in autos and other products, and this is a fundamental U.S. objective in the USMCA review. (A proposal to require 50% U.S. content in USMCA-qualifying autos reflects this idea).

As for more specific topics to be discussed in the review, in his remarks at the CFR event, Greer mentioned Mexico's "external trade policies," noting that Mexico has already "raised tariffs on non-FTA partners, particularly in Asia, because it's in Mexico's interest. Mexico competes with a lot of these Asian economies for the US market, and so that's an area I think of common agreement ... ." Obviously China is the main target here.

China also lies behind various other "economic security" issues: The Trump administration would like to see Canada and Mexico coordinate more with the U.S. on export controls and investment screening (the Biden administration wanted this as well).

And China plays a role in U.S. demands to tighten up rules of origin to limit non-USMCA content in imports that benefit from zero tariffs on USMCA-qualifying goods, including autos and other products.

And finally on China, there will be talks about cooperation on critical minerals.

Summing up those last few paragraphs, China will be a big deal in the USMCA review!

Beyond China, there are traditional issues related to U.S. market access for agriculture, such as dairy in Canada and corn in Mexico, both of which were litigated under the USMCA's state-state dispute settlement mechanism.

And then there are a variety of other laws and regulations that U.S. interest groups have raised concerns about and the U.S. government has already been pushing:

- Mexican energy regulation
- Mexican labor laws
- Mexican treatment of geographical indications
- Canada's online streaming law
- Canadian provincial bans on U.S. alcohol

Clearly, there are a lot of issues on which the Trump administration will be pressing Canada and Mexico. But which of these are most important to the Trump administration? How do they rank all of these? What tradeoffs will they be willing to make? That's very hard to say looking in from the outside. (And they may not know yet either!)

Taking a quick look in the other direction, what do Canada and Mexico want out of all this? One big issue is how the various Section 301 and Section 232 tariffs are applied to them. The forced labor Section 301 investigation targets both Canada and Mexico; the excess capacity Section 301 investigation includes Mexico but not Canada. And the Section 232 tariffs have an impact on a wide range of Canadian and Mexican products.

Canada and Mexico would like as big an exclusion from these tariffs as they can get, on steel, aluminum, autos, lumber and other products. As the Canadian government put it in relation to Section 232, "discussions with the United States on addressing sectoral tariffs will be essential." (The proposed Section 301 tariffs related to forced labor concerns do not cover "USMCA-compliant goods of Canada or Mexico.")

Finally, for Canada, anti-dumping/countervailing duties on lumber are always a concern, and for Mexico these kinds of duties on seasonal produce are an issue, so that may come up as well.

Are separate bilateral deals possible?

As there was with the original NAFTA renegotiation, there has been talk of separating the USMCA into separate bilateral deals between (1) the U.S. and Canada and (2) the U.S. and Mexico (Canada and Mexico have the CPTPP which applies between them). I think it's unlikely things will go this route, but if you wanted to make the case that it could, you might point to the following.

First, Mexico and the U.S. started their USMCA review discussions well before Canada and the U.S. did. Here are some USTR press releases on the Mexico-U.S. developments from March 5, March 18, April 20, May 27, and May 29. The May 27 link sets out the following negotiating timeline:

On May 28-29, Deputy United States Trade Representative Ambassador Jeff Goettman will lead a U.S. delegation to Mexico City for the first bilateral negotiating round with Mexico, which will feature negotiations on economic security and rules of origin for key industrial goods. On June 16-17, the two countries will hold a second negotiating round in Washington, D.C., which will also include discussions on agriculture and a level playing field. During the week of July 20, the United States and Mexico will hold a third negotiating round in Mexico City.

By contrast, formal Canada-U.S. talks have yet to take place, and clearly Mexico and the U.S. started talking earlier and are further along.

Second, as is well-known, and which I'll come back to later in the post, the Canada-U.S. relationship is struggling to deal with some heated rhetoric at the highest political levels. I won't go through all the details, but everyone knows the main points here.

Could all of this lead to separate bilateral deals? At a CFR event in late May, Greer was asked the following by former U.S. Trade Rep. Mike Froman:

... how serious are the fissures with Canada, the rupture with Canada? And can you envisage USMCA being transformed into separate agreement with Mexico, separate agreement with Canada, or no agreement with Canada?

Greer responded:

Well, I would say that, the team right now is in Mexico, my team, and they're negotiating with Mexico on a bilateral basis. I speak with some regularity to my Canadian counterparts. Our sense is that we have with Canada some trade challenges, which ... some people might think, "Oh, those are just irritants." To us, they're significant, and the reality is we've spent the past year and a half going to countries, telling them we have to have some level of tariff on the globe to deal with this giant deficit that we're dealing with, to try to reshore, etc. And most countries have, grudgingly, but they've said, "We understand your policy. We understand, so we're going to negotiate with you. We're going to remove some of these tariffs and non-tariff barriers, etc." Canada's approach has been different. They and China retaliated against the United States. Two countries in the world ... China and Canada. So they're just in a different spot, and it's hard to see necessarily where that ends. I will say, we have trade in energy and minerals and other things, fertilizers between the U.S. and Canada, that really has not been affected. It's been untouched, that's gone without any trouble. I think those are areas of common economic benefit, I think. When it comes to some of these manufactured goods, we have a different view.

Will any of this matter for the USMCA review? As discussed further below, the personal animosity between some people in the U.S. and Canada at the moment is beyond anything I've ever seen in that relationship. In the NAFTA renegotiation, things got a bit touchy between the Canadian and U.S. trade officials, but this time around the touchiness has filtered down to the people. A significant number of Canadian citizens are very angry, and that has had a real impact on how government officials approach things.

Nevertheless, I tend to agree with Prime Minister Carney's assessment of the USMCA negotiations: "These things have their own rhythm, and they also have what's happening above the surface and what's happening below the surface." It may be that some statements by government officials for public consumption are more of a negotiating tactic, and things aren't quite as bad as they sound.

But you never know, and the occasional talk about turning the USMCA into bilateral agreements has me wondering (and worried!) about the following scenario.

I had been assuming that under USMCA Article 34.7, the decision on whether to extend the agreement would be purely a trilateral one. Either the three parties agree to extend, or they don't. But given the recent rhetoric, I'm thinking the Trump administration could actually try to inject a bit of bilateralism into the renewal decision, either as a threat to Canada or just as a preferred outcome.

Let's say the U.S. and Mexico reach agreement on the various issues they have been talking about. Could these two countries then sign a protocol that says something like "in the event that the USMCA is not extended, and terminates in 2036, the USMCA will continue as a bilateral agreement between the U.S. and Mexico"?

I can imagine that Trump administration officials are looking into possibilities like this. Would Mexico go along with it though? They have been talking to the Canadians about all this as well, and it would certainly not be an ideal outcome from their perspective. At the same time, they would still have a trade deal with Canada through the CPTPP.

Anyway, I don't think this is likely, but if we are thinking about all possible outcomes here, we may have to put this on the table.

Where is Congress in all this?

This question about Congress applies to many things in trade policy over the past year and a half or so. Will the USMCA review be the event that wakes Congress up? Are they going to hold any hearings? Will they just put out press releases and letters to the administration, with some generalities about what they want to see here? (So far I've come across letters from a group of Dem Senators, a group of Dem House Ways and Means members, a bipartisan group of Senators on agricultural market access, and a group of House GOP members of Congress on enforcement of the Mexican VAT.)

Will members of Congress mostly just send these letters and lobby quietly behind the scenes? Whatever their plan is, they better start speaking up soon if they want to have an impact on the decision on whether to extend. But maybe they don't see a non-extension as a big deal at this moment either, given the 10-year soft deadline noted above.

Non-trade issues

As much as many of us in the trade policy world might like to, we can't separate out non-trade issues from trade issues. For Canada, some of the key non-trade issues being contested right now relate to defense.

One of these is Canada's potential participation in the Trump administration's Golden Dome project. Back in 2025, Trump said: "I told Canada, which very much wants to be part of our fabulous Golden Dome System, that it will cost $61 Billion Dollars if they remain a separate, but unequal, Nation, but will cost ZERO DOLLARS if they become our cherished 51st State ... They are considering the offer!" I'm not sure if that reflects actual costs, but regardless, it would cost Canada something. Is paying some amount here worth it for Canada to get better USMCA review terms?

Along the same lines, there are also some purchases of planes at issue right now. Canada is trying to decide between buying U.S. F-35s and Swedish Gripens; and there is a radar plane purchase up for grabs too, with Canada apparently going with Saab over U.S. suppliers.

I don't know exactly how the Canadian government is thinking about all this, but I can imagine they are using these military spending decisions as leverage to try to get a more favorable trade deal. (There was also a U.S. pause with the U.S.–Canada Permanent Joint Board on Defence (PJBD), which may fit in here somehow, I think.)

And then on the Mexican side, you have the perennial "cracking down on cartels" issue, as well as the more recent "oil sales to Cuba" issue.

These issues may not come up directly between the USMCA trade negotiators, but they will be there in the background and could influence the USMCA review outcomes.

Tough rhetoric and bad feelings in Canada-U.S. relations

Trump and his administration must be aware of the effect the 51st state talk has had in Canada. Whatever their level of awareness, though, they have not toned things down very much, with the U.S. ambassador to Canada being quite aggressive with his rhetoric.

Canadians have reacted to all this with moves such as the Ontario ad touting Reagan's tariff policies or Carney's speech in Davos. In response, the Trump administration and its surrogates have been very critical of the Canadian reaction. Here's Deputy USTR Rick Switzer speaking at an event in April:

What I'll say is that the countries that are led by serious leaders, and I'll say President Sheinbaum is a serious leader in Mexico, when we came in and we were talking, Ambassador Greer was just there, we're talking to Mexico about this, and the President has spoken directly about this, they have been very serious. Look, we know the United States is our most important economic partner, that it is the policy of President Sheinbaum, that the United States and Mexico will have a positive economic relationship, and that we know that we'll have some friction, ... but we're going to figure it out, right? This is the bottom line.

There are other economies who decided to make it personal. And you know, I think Carney has made it personal. I think it's political malpractice for the prime minister of ... Canada to pit politically himself against any president. I don't care what the president is, who the president is, what party they represent, it's political malpractice. Canada is dependent upon the US economy. That's just a fact, right? That's not hubris. That's not something that Canada needs to be concerned about. It's not something Canada can change, right? The fundamental fact is geography wins out. Canada is located where it's located. They can't move shop. They can have a weak economy that is underperforming and not doing well, and Carney can feel superior. Or they can have an economy that participates as a partner to the US economy. And Carney can do what a grown-up should do, which is figure it out, and come like President Sheinbaum and decide that the United States and Canada will have a positive economic relationship. It's my job as a person who's [supposed] to protect Canadian jobs, Canadian citizens, and the Canadian economy, to not let my ego and my feelings dictate what's best for my own economy.