President Donald Trump’s tariff policies have significantly impacted the United States-Mexico-Canada Agreement (USMCA) before its renegotiation, a senior administration official revealed. The US declined to renew the USMCA in its current form during the first mandatory review but kept it in force for ongoing negotiations with Mexico and Canada. Trump’s trade agenda has already transformed the commercial ties among the three countries more than the review process itself.
The official highlighted that the US trade deficit with Canada has decreased by 25% in the past year and a half, while the deficit with Mexico has risen due to tariffs. Trump’s tariffs have become the primary driver of North American trade policy, overshadowing the USMCA to some extent. The administration’s focus remains on reducing the US trade deficit and promoting domestic manufacturing.
Recent trade data indicates progress, with the US reducing its goods trade deficit by 26% over the past year and achieving record-breaking monthly exports exceeding $300 billion. The administration aims to ensure that its trade relationship with Mexico and Canada aligns with its current policy direction. Despite concerns about prolonged uncertainty for businesses during the review process, the official emphasized the strength of the US economy and consumer market.
The administration aims to conclude negotiations with Mexico and Canada well before the USMCA review period ends, rather than prolonging discussions. The USMCA, which replaced NAFTA in July 2020, introduced a six-year joint review process for deciding on the agreement’s extension. Failure to reach a unanimous decision initiates a review period for ongoing negotiations, without immediate termination of the pact.
