The United States has refused to extend the North American trade agreement with Canada and Mexico under its existing terms, the U.S. trade envoy announced Wednesday, pushing the pact into a year‑to‑year review process that is expected to stir fresh uncertainty for businesses across the continent.

The U.S.-Mexico-Canada Agreement (USMCA) remains legally in force for another decade even without a renewal by Wednesday’s deadline. Instead of a long‑term extension, the deal will now face annual reviews, with any member country retaining the right to withdraw entirely. “The United States did not agree to renew the USMCA in its current form. As a result, the USMCA is not renewed,” U.S. Trade Representative Jamieson Greer said in a statement. “The United States will continue to engage with Mexico and Canada to address the agreement’s shortcomings and our trade deficits with these countries,” he added.

A senior U.S. official told reporters Wednesday that persistent trade gaps were a primary concern, along with market access issues in Canada and Mexico, particularly in sectors such as dairy and corn. Mexico’s economy secretary, Marcelo Ebrard, confirmed the impasse, while the USTR held a virtual meeting with Ebrard and Canada’s minister for U.S. trade, Dominic LeBlanc.

The Trump administration’s decision came as little surprise. President Donald Trump said in June that he was not “looking to renew” the agreement, despite having signed and praised it during his first term. Canada and Mexico had both pushed for a 16‑year renewal of the USMCA. With the pact now subject to rolling negotiations rather than a fixed extension, talks could stretch for months or even years, covering everything from tariff schedules to sector‑specific trade rules.

Although the 10‑year countdown to the deal’s expiration remains in place, the senior U.S. official said countries need not wait a full decade to reach a conclusion. “I think we need to come to a conclusion quickly, if possible,” the official added.

Analysts say the development does not immediately alter day‑to‑day trade flows between the three nations. However, Scott Lincicome of the libertarian Cato Institute told AFP that the uncertainty could dampen business investment, though he expects the USMCA to survive given that intra‑North American trade in goods and services reached nearly $2 trillion in 2024. Even as Trump unleashed tariffs on virtually all trading partners during his second presidency, he made critical exemptions for USMCA‑covered products.

Reactions from industry and labor groups underscored the divided perspectives on the pact’s future. Matt Blunt, president of the American Automotive Policy Council, stressed that “North American economic integration enables enormous competitive benefits for the region”. But Brian Bryant of the International Association of Machinists and Aerospace Workers union argued that the USMCA “should not simply be extended as‑is,” calling for tougher labor standards and “meaningful measures that discourage corporations from moving jobs out of the United States and Canada in pursuit of cheaper labor”.

The United States and Mexico have already held two rounds of bilateral trade talks, with a third scheduled for the week of July 20. Mexico has been seeking to reduce U.S. tariffs on steel, aluminum, and autos after Trump imposed sharp duties on steel, aluminum, and copper imports. While Greer did not announce a formal schedule for talks with Canada, he has met with LeBlanc.

The USMCA, which took effect in 2020, replaced the North American Free Trade Agreement (NAFTA) that had been in place since 1994. The pact helped lower or eliminate tariffs and other trade barriers on a wide range of products traded among the three countries.