The mandatory six-year review of the US-Mexico-Canada Agreement has begun, with a major development. Reports indicate the United States will not extend the USMCA in its current form. This decision triggers a decade-long sunset countdown, with the agreement potentially expiring on July 1, 2036.
The USMCA, which replaced NAFTA in 2020, governs roughly $1.3 trillion in annual trade. If all three nations agreed to extend it, the deal would run for another 16 years. Without an extension, annual reviews will occur until the final expiration date.
Key negotiation areas include automotive rules of origin, labor enforcement, and digital trade provisions. The automotive sector is particularly sensitive due to requirements for North American content and wage thresholds for workers.
The agreement also includes a rapid-response mechanism for labor complaints at specific facilities in Mexico. Digital provisions address cross-border data flows and data localization.
For markets, the long sunset period means no immediate disruption. However, the US approach suggests separate negotiations with Canada and Mexico, indicating distinct leverage strategies with each partner.