In July, the Trump Administration chose to let the United States-Mexico-Canada Agreement lapse, leaving companies in flux. According to the Center for Strategic and International Studies, choosing not to renew this agreement for 16 years will instead trigger an annual review process that will run until 2036.
In a recent interview about the deal President Trump created in his first Administration, he said, “I’d rather be independent…Mexico and Canada need us, we don’t need them. The deal is important for them, it’s not important for us.”
Despite this, Canada’s Minister of Internal Trade, Dominic LeBlanc, was back in Washington last week to discuss the deal and hopefully reach a breakthrough in negotiations with the U.S. Canada’s Prime Minister, Mark Carney, has said while USMCA is important, he is trying to create a larger trade agreement with the U.S., and to specifically have tariffs lifted on sectors like steel, aluminum, lumber and the auto industry.
Along the Southern border, trade relations with Mexico also remain in flux. The Trump Administration and Mexico leadership are set to hold another round of USMCA negotiations in DC early next month. This after U.S. Trade Representative Jamieson Greer met with Mexico President Claudia Sheinbaum two weeks ago. Mexico’s Economy Ministry called those talks “constructive.”
While Mexican leadership is calling those conversations productive, they are also facing increased pressure from U.S. officials to institute tariffs on China similar to those America has. U.S. trade officials are pushing for Mexico to impose Section 232-style tariffs on Chinese aluminum and steel.
All of this said, despite President Trump’s very vocal frustration with USMCA, the Canadian Broadcasting Company notes there are multiple reasons why the White House is unlikely to scrap the deal completely:
U.S. Industries Want USMCA
Major trade lobby groups are pushing for the Trump Administration to renew the trade deal. The National Association of Manufacturers released a report in May praising USMCA, writing this deal is, “one of President Trump’s signature accomplishments from his first term,” and that, “the USMCA is a pillar for the greatness of manufacturing in the United States.” The organization credits this deal with bringing more jobs, investments and exports to U.S. factories.
Mexico Negotiations
Despite the fact the White House has let the deal lapse and the President says the U.S. doesn’t need the deal, his Administration has continued to negotiate with BOTH Canada and Mexico. As mentioned, officials are even pushing for Mexico to implement tariffs on Canada. So the White House may say it is not interested, but it is still keeping negotiation lines open.
Political Pressure
Inflation is high, while it fell from 4.2% in May to 3.5% in June, it still rose 2.6% from last June. Also, recent polling shows the President’s approval rating on the economy has sunk to just 32%. This is all happening in a critical Midterm cycle for the Republican Party. While there’s not consistent poll on what scrapping USMCA will do or has done to the President, there is plenty of research on the positive aspects of the deal.