The world's biggest regional trade deal got killed by the man who proposed it.
Coffee at the ready.
This one comes with delicious recipes…
The Big Sip
The USMCA (United States-Mexico-Canada Agreement) is not being renewed.
Donald Trump refused to extend the trade deal he negotiated, signed, and called "the best agreement we've ever made". Washington declined to renew at the mandatory six-year review on Wednesday. The pact now rolls over to annual reviews until it expires in 2036. Roughly $2 trillion in yearly North American trade now sits on a rolling one-year lease. US-Mexico talks resume in Mexico City on 20 July; Canada, meanwhile, is still refreshing its inbox.
As for the clause making all this possible, check the author's name.
You'll recognise it.
Here’s Your Brew
Start with the murder weapon.
When Trump's first-term team replaced NAFTA, they demanded a kill switch. The sunset clause forces the deal to die unless all three countries actively renew it. Canada and Mexico hated it and bargained the five-year fuse up to sixteen, with a review at year six. Wednesday was year six.
Washington declined its own invention.
The stated reason is deficits.
America ran a $46 billion goods trade deficit with Canada and a $197 billion deficit with Mexico last year. Trade rep Jamieson Greer said a rubber stamp wasn't in the national interest. The White House argues that Trump's tariffs have already rewritten the relationship. Mexico, which never retaliated against those tariffs, gets fresh talks this month.
Canada, which did, is still waiting for a meeting.
The bill lands on business.
The Bank of Canada puts the average effective US tariff on Canadian goods at 5.1%. All under a deal marketed as free trade. Canadian business investment has fallen for five straight quarters, and Oxford Economics calls the annual-review limbo "a definite dampener". Supply chains are planned for decades.
They're now reviewed like gym memberships.
None of this kills the deal outright.
It stays in force until July 2036, and the three sides can renew it in any year they fancy. The likelier path is bilateral side deals, partly because they dodge the US Congress.
Either way, North America's trading rulebook becomes a yearly renegotiation, and factory decisions across three countries now wait on it.
Two Sides, One Mug
Pro: The deficits are real, and annual reviews give Washington leverage to tighten rules of origin and stop China from routing goods through Mexico.
Con: A deal on a one-year lease is barely a deal; uncertainty is already freezing investment, and the most trade-exposed US states voted for Trump.
Our read: Leverage decays. Every year of uncertainty taxes all three economies before a single concession gets banked.
Receipt of the Day
[Report] Office of the US Trade Representative: "Ambassador Greer Issues Statement on the USMCA Joint Review"
Washington formally declined to renew while confirming the pact remains in force as talks continue.
Why it matters: the USMCA isn't dead. It's on probation, with a parole hearing every July until 2036.
Spit Take
89.9% of North Dakota's exports go to Canada and Mexico.
(Peterson Institute)
Extra Curricular Coffee Break Links
CNBC: Nike banks a $986 million tariff refund. The duties meant to punish importers are boomeranging back, with interest, after the Supreme Court struck them down.
CNBC: EU-China trade tensions collide with an air-conditioner boom. Brussels wants to shrink its China deficit, even as a record heatwave sends Europeans sprinting for Chinese cooling units.
CSIS: Six scenarios for North America's future. The sharpest map of where the USMCA goes from here, from clean renewal to slow death.
Mugshot 📊
The USMCA now faces a review every July until 2036.
Call it:
Renewed by 2028
Limps to 2036
Replaced by side-deals
Renamed and declared a win
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