The United States, Mexico, and Canada are set to miss the July 1 milestone to renew the CUSMA trade deal, opening the possibility of months or years of haggling over rules and tariffs for auto manufacturing and other industries, according to sources familiar with the matter.
Background of the Agreement
The agreement, signed by former U.S. President Donald Trump during his first term, includes a deadline next month to extend the pact for 16 years. If all three countries fail to agree on renewal, the deal remains in place until at least 2036, barring a complete withdrawal, and enters rolling annual reviews.
Likely Scenario
Officials close to the process now indicate that declining to formally renew is the most probable outcome. This would trigger negotiations and an indefinite period of uncertainty about the future of the agreement, the sources said, speaking on condition of anonymity to discuss private talks.
Bilateral Talks Underway
Meanwhile, the U.S. has started separate bilateral discussions with Canada and Mexico over trade irritants, some of which are only loosely related to CUSMA. Side deals may be struck to address these issues without altering the underlying text of the pact.
Economic Stakes
The economic stakes are enormous for all three countries. CUSMA governs nearly US$2 trillion in annual trade among them. Goods compliant with the agreement have largely been exempt from Trump's tariffs, including new duties announced this week.
Canada and Mexico are two of the largest U.S. trading partners and top buyers of American goods. However, they have faced new tariffs on products such as autos and steel, straining ties and spurring boycotts.
U.S. Trade Representative's Stance
U.S. Trade Representative Jamieson Greer has stated that the U.S. will not automatically extend the agreement. The U.S. and Mexico have already scheduled a third round of talks for mid-July, while discussions with Canada have been less formal.
Canadian Perspective
Canadian Minister Dominic LeBlanc, responsible for U.S. trade, met with Greer in Washington and suggested that July 1 should not be viewed as a critical deadline. "I think we've got to be careful not to set up a cliff that doesn't exist," he said.
Trump's Goals
One of Trump's aims is to bring more automotive assembly and manufacturing jobs to the U.S. using tariffs and trade rules. The White House is pushing for a new standard requiring at least 50 percent U.S. content in new vehicles to qualify for tariff-free treatment—a condition Trump unsuccessfully sought during the original CUSMA renegotiation.
