The Trump administration has decided not to renew its trilateral trade pact with Canada and Mexico, choosing instead to conduct annual reviews of the treaty as the president Donald Trump formerly called “the best agreement we never did.
The much-anticipated decision on the United States-Mexico-Canada Agreement, known as USMCA, was revealed Wednesday, the deadline for the three North American trading partners to determine whether they would renew their agreement for another 16-year term.
The decision means that the USMCA will remain in force for another ten years, provided no member attempts to withdraw. But it also triggers annual reviews that could result in the renegotiation of major parts of the treaty.
Trump “chose not to approve the renewal of the USMCA without addressing existing issues,” a senior administration official told reporters on a call announcing the decision.
“In other words, the United States has not agreed to renew the USMCA in its current form,” the official said. “As a result, the USMCA is not renewed.”
Trump’s “main” concern regarding USMCA is US trade deficits with its two trading partners, according to the official.
FILE PHOTO: U.S. President Donald Trump arrives to make a statement with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau, on the signing of a new free trade agreement in Buenos Aires, November 30, 2018, on the sidelines of the G20 leaders’ summit.
Saul Loeb | AFP | Getty Images
The official added that Trump “had already changed the nature of the trade relationship between the United States, Canada and Mexico” before Wednesday’s deadline through his tariffs.
U.S. Trade Representative Jamieson Greer said in a statement issued while the call was underway that the Trump administration “will continue to work with Mexico and Canada to address the deficiencies in the agreement.”
The USMCA was negotiated during Trump’s first term to replace the previous 26-year-old trilateral trade agreement known as NAFTA, which Trump often criticized as a crude deal for the United States.
Read more about CNBC’s politics coverageWhen the new deal took effect in July 2020, Trump touted it as “the fairest, most balanced, most beneficial trade deal we’ve ever signed.”
But Trump’s enthusiasm for the USMCA has waned recently, coinciding with growing tension in the United States’ relations with its two neighbors.
“I don’t know if I’m going to renew it,” Trump said of the USMCA in June. “We don’t need anything that Canada has. We don’t need anything that Mexico has, but they need everything that we have. And they need to treat us better.”
Trump has long complained about the United States’ persistent trade deficit with its economic partners. Seeking to address this perceived injustice and force further policy changes, Trump, during his second term, imposed a series of tariffs on nearly every country, including Mexico and Canada.
Trump’s tariff regime has since been blocked by legal losses.
The United States and Mexico have already begun a series of bilateral negotiations that are expected to continue beyond the July 1 deadline. However, the United States and Canada have not started their own negotiations.