[Edaily Reporter Seong Joowon ] The Trump administration has rejected a long-term extension of the United States-Mexico-Canada Agreement (USMCA). The agreement will remain in effect for 10 years, but the three countries will transition to a “rolling negotiation” system in which they conduct annual reviews and renegotiations.

Jamison Greer, U.S. Trade Representative (USTR), stated in a press release on the 1st (local time), “The United States does not agree to renew the USMCA in its current form. As a result, the USMCA will not be renewed.” He added, “The United States will continue to consult with Mexico and Canada to address the shortcomings of the agreement and the trade deficits with these countries,” explaining that “the agreement will remain in effect until these issues are resolved or the agreement is terminated.” In a separate interview with Bloomberg News, Greer said, “I believe there are significant issues,” adding that he was not prepared to approve the agreement as is.
◇First Joint Review in Six Years… Failed 16-Year Extension Leads to ‘10-Year Time Limit’
The USMCA was signed in 2018—during President Trump’s first term—to replace the North American Free Trade Agreement (NAFTA) and entered into force in July 2020. The agreement includes a sunset clause setting a 16-year term and stipulating that its extension be determined through a joint review every six years; today marked the deadline for the first such review.
Both Mexico and Canada requested a 16-year extension, but since the United States did not agree, the agreement will remain in effect for 10 years. If the three countries fail to reach an agreement during this period, the USMCA will automatically terminate in 2036. The agreement will also terminate if any one country declares its withdrawal, in which case it will end after a six-month grace period.
A senior U.S. administration official stated, “We have no intention of dragging out issues related to the agreement for 10 years,” adding that President Trump has the authority to terminate the agreement earlier—including through withdrawal—during the annual review period if he deems it necessary.
◇ Third Round of Negotiations with Mexico… Canada Relatively Sidelined
The United States will hold its third round of bilateral negotiations with Mexico in the fourth week of July. A senior U.S. administration official stated that these talks are expected to cover the strengthening of rules of origin for industrial goods other than automobiles, as well as economic security issues, and that aerospace, intellectual property rights, and water quality issues may also be on the agenda. In the two rounds of negotiations so far, the Trump administration has demanded that the percentage of U.S.-made parts in North American-made automobiles be raised to 50% and that the total regional content be increased to 82%.
In contrast, negotiations with Canada have proceeded at a relatively slower pace. Regarding Canada, Representative Greer expressed dissatisfaction, stating, “One day they say they will help reindustrialize the U.S., and the next day they say they will attract Chinese investment,” adding, “We are receiving mixed messages.”
On the Mexican side, Economy Minister Marcelo Ebrard reported on the results of a video conference with CEO Greer and Canadian Trade Minister Dominic LeBlanc, stating, “We are not in a hurry, but we do not want uncertainty either.” Minister Leblanc stated that Canada would continue discussions to resolve the U.S. tariffs on steel, aluminum, automobiles, and lumber. Mexican President Claudia Sheinbaum said ahead of the U.S. announcement, “Our joint work continues. Today does not mark the end of everything.”

◇Key Issue: Blocking the Indirect Inclusion of Chinese Goods
It has been reported that the key issue in this review is “containing China.” The U.S. is wary of Chinese parts or investments being indirectly incorporated into North American supply chains via Mexico and Canada, and is seeking to strengthen rules of origin for automobiles and standards for the use of U.S.-made parts. Bloomberg Economics analyzed that, following the Trump administration’s tariff hikes last year, there has been an increase in declarations of compliance with USMCA requirements, with approximately 90% of imports from Canada and Mexico currently recorded as USMCA-eligible goods.
The U.S. Chamber of Commerce and the Business Roundtable have called for the USMCA to be maintained and strengthened. Automakers such as General Motors (GM) and Toyota, along with parts suppliers and dealer associations, issued a joint statement noting that the agreement has supported manufacturing investment and jobs in the U.S., and called for the preservation of the trilateral cooperative framework. Nissan CEO Iván Espinosa told Reuters that demands to increase the proportion of U.S.-made parts could raise the cost of vehicle purchases for American consumers, stating, “We cannot manufacture every part in the United States. We need a feasible solution.” The Retail Industry Leaders Association (RILA), whose members include Home Depot and Target, also called for minimizing uncertainty regarding supply chain plans. In contrast, the International Association of Machinists and Aerospace Workers argued that this review should be used as an opportunity to strengthen labor standards and improve rules of origin.
◇Annual Trade Volume Among the Three Countries: 2,482 trillion won
The three USMCA countries account for about one-third of the world’s gross domestic product (GDP). Their combined population totals 510 million. Annual trade among the three countries amounts to approximately $1.6 trillion (about 2,482.4 trillion won).
According to the U.S. Bureau of Economic Analysis (BEA), the U.S. recorded a $46 billion trade deficit in goods with Canada and a $197 billion deficit with Mexico last year. Some observers argue that President Trump effectively rendered the USMCA toothless last year by imposing tariffs of 25% on automobiles and auto parts from Canada and Mexico, 50% on steel and aluminum, and 10% on lumber, citing the need to curb illegal immigration and the influx of drugs.
Following the imposition of high tariffs on China by the first Trump administration, Chinese companies also circumvented the tariffs by establishing factories in Mexico. Among South Korean companies, KIA CORPORATION(000270), and others benefited from the tariff relief by setting up factories in Mexico.
While the USMCA will not be terminated immediately, uncertainty is expected to persist for some time among automotive, agricultural, retail, and energy companies that rely on North American supply chains, as annual reviews have been announced. If President Trump continues to use the threat of tariffs as a bargaining chip, the level of pressure on Canada and Mexico could increase further. The outcome of the third round of negotiations between the U.S. and Mexico, scheduled for the fourth week of this month, is expected to serve as the first litmus test for the future direction of the agreement.