The Mexican peso depreciated and the stock market fell earlier today after the Trump administration announced on July 1 that the United States would not renew the United States-Mexico-Canada Agreement in its current form, choosing instead to pursue annual reviews of the trade pact.
U.S. Trade Representative Jamieson Greer confirmed the decision on Wednesday, stating that “the United States did not agree to renew the USMCA in its current form.” The announcement came on the deadline for the three countries to decide whether to extend the agreement for another 16 years, according to Reuters.
The decision marks a major shift in the Trump administration’s stance toward the trade deal it negotiated during the first term. Trump previously called the USMCA “the fairest, most balanced, and beneficial trade agreement we have ever signed into law” when he signed it in January 2020. However, his enthusiasm has waned, and in June he said he did not know if he would renew it, citing concerns about trade deficits.
The USMCA will remain in effect for another 10 years with annual reviews before it expires, unless the three countries agree on changes, according to Reuters. This replaces the original structure, which would have automatically renewed the agreement for 16 additional years unless a party formally objected.
Mexico and Canada had both backed extending the agreement. Mexico’s Economy Minister Marcelo Ebrard told reporters on Wednesday that the country wanted to help address U.S. concerns about job losses and trade deficits, but said the U.S. and Mexico remain divided over stricter automotive rules of origin, according to Reuters.
The Trump administration’s primary concern with USMCA centers on persistent U.S. goods trade deficits with both nations. The U.S. trade deficit with Mexico reached $197 billion in 2025, while the deficit with Canada stood at $48.3 billion that year, according to Reuters. The administration indicated it will continue bilateral negotiations with Mexico, with talks scheduled for the week of July 20.
The USMCA, which entered into force on July 1, 2020, replaced the North American Free Trade Agreement (NAFTA) and covers roughly $1.6 trillion in annual trilateral trade. The agreement includes a six-year review clause, which triggered the July 1, 2026 decision point that the Trump administration did not renew.
Sources
- Reuters — Confirmed the U.S. declined to extend the USMCA, the trade deficit figures, and Mexico’s position on automotive rules
- CNBC — Reported the Trump administration’s decision and the primary concerns about trade deficits
- Wikipedia — Confirmed the peso and stock market depreciation following the announcement, and provided background on the agreement
