Trade ministers reopened sensitive bargaining over USMCA terms. Talks could trigger a decade-long extension or reshape North American auto production rules.

On Wednesday, the heads of the United States, Mexico, and Canada’s trade ministries reviewed the terms of the USMCA trade agreement. This is part of efforts that could trigger a decade-long sunset of the regional agreement, while negotiations continue to satisfy President Donald Trump’s demands to move a larger portion of production back to the United States.

The United States’ top trade official Jamieson Greer held a virtual meeting with Mexico’s Secretary of Economy Marcelo Ebrard and Canada’s Dominic LeBlanc, the minister responsible for trade between the two countries, to determine whether they want to extend the USMCA for another 16 years.

However, Greer has already said that more time is needed to fix USMCA issues, and has planned another round of talks with Mexico for the week beginning July 20. He also said that formal talks with Canada regarding changes to the USMCA have not yet begun.

Mexican President Claudia Sheinbaum, who urged extending the USMCA, noted on Wednesday that such an extension could be possible at any time after the three countries reach an agreement within the next decade.

Today this is not a hard deadline. If in five months or three years the parties say, “We can extend for another 16 years,” that extension could be granted.

– Claudia Sheinbaum

Continued collaboration goes on – it does not mean that everything ends today.

– Claudia Sheinbaum

Trump, who imposed a 25% tariff on cars from Mexico and Canada, a 50% tariff on metals, and a 10% on lumber, has repeatedly said he does not want to extend the USMCA, which he launched in 2020 as the “best deal we’ve ever made.”

In two rounds of talks with Mexico, the U.S. administration demanded that cars manufactured in North America contain 50% domestic content, raising the regional threshold to 82%.

IMPACT ON THE AUTOMOTIVE INDUSTRY

A refusal to extend the USMCA delays the consideration of issues but increases uncertainty for regional investors, as the agreement will undergo annual reviews, and the future remains in doubt.

American carmakers are calling for a quick resolution that would restore tariff-free trade of cars and parts among the United States, Canada, and Mexico. They point out that current tariffs put them at a disadvantage compared with manufacturers from Japan and South Korea, where tariffs are lower and the rules of origin allow broad use of cheap parts from China.

House Democratic leader Rosa DeLauro emphasizes that Trump should pursue a USMCA review in a bipartisan format to strengthen worker protections, as the existing agreement, in her view, has not halted the decline in U.S. jobs compared with the 1994 agreement.

If President Trump does not commit to reviewing the USMCA in a bipartisan format to strengthen worker protections, American workers will continue to pay the price. This is not the time for half-measures or extending the current status.

– Rosa DeLauro

Labor unions also call for renegotiating the deal to raise wages in Mexico and strengthen labor and environmental standards.

USMCA has not yet halted the race to lower wages and worse working conditions in North America, as wealthy corporations continue moving production to Mexico.

– Roxanne Brown

To support Canada, the head of the country’s largest private union Unifor says the country must defend its interests against Section 232 tariffs that harm workers and key industries.

These tariffs hurt workers and key industries such as autos, steel, aluminum, and the forestry sector. Canada needs resources that the U.S. also needs, including critical minerals, aluminum, potash, and energy. We must stand firm and harness this potential to secure a fair deal for Canadian workers.

– Lana Payne

Overall, the USMCA review is ongoing, but its future depends on the willingness of the three countries to agree on terms that balance workers’ interests with the needs of the regional economy. The various stances from governments, industries, and unions suggest a decision will be reached in the coming months or even years, but the path to it will remain challenging.