USMCA Watch: The Latest on the North American Trade Agreement
October 20, 2026 | ATN Trade & Finance
The North American trade agreement has entered a new and more uncertain phase. The United States declined to renew USMCA at its mandatory six-year review, bilateral tensions between the US and Canada have escalated into a de facto trade war, and the clock is now running on a renegotiation process that won't conclude before July 2027 at the earliest.
The Six-Year Review: Not Renewed, Still in Force
On July 1, 2026 — the agreement's sixth anniversary and the date its first joint review was required — USTR Jamieson Greer confirmed that the United States would not agree to renew USMCA in its current form. The decision was not a termination: under Article 34.7, the agreement remains in force until July 1, 2036 unless a party formally withdraws on six months' notice. What non-renewal triggers is a mandatory annual review process — the three countries must meet each year until they either agree to extend or the current term expires. The USTR cited US trade deficits with both Canada and Mexico, and the need to address the agreement's "shortcomings," without specifying terms.
Annual Review Process Launched
On October 2, USTR announced it is seeking public comment to inform the 2027 joint review. The Federal Register notice (FR Doc. 2026-20341) was published October 5, and written comments are due January 12, 2027 (docket USTR-2026-0595). A public hearing will also be held; no date has been set. The July 1, 2027 joint review is the next formal milestone.
US-Mexico: Three Rounds In, Progress Signaled
Bilateral negotiations between the US and Mexico have moved faster than the trilateral process. Three rounds of talks took place between May and late July 2026, covering rules of origin, regional value content, steel and aluminum, autos, and economic security provisions — including measures to limit Chinese input into North American supply chains. At the G20 Trade Ministerial in Milwaukee, Mexico's Economy Secretary Marcelo Ebrard told reporters he and USTR Greer were "getting close on many things." A fourth round has not been publicly scheduled.
US-Canada: Trade War, Not Negotiations
The Canada track looks very different. Talks between Washington and Ottawa have not yet formally begun, and a parallel dispute escalated sharply in the summer. In August, the US imposed 50% tariffs on approximately $20 billion in Canadian imports. Canada retaliated with counter-tariffs in September. The US then expanded the 50% tariffs and imposed import bans on certain Canadian alcoholic beverages, dairy-related products, and motor vehicles. US Section 338 duties and Canadian counter-tariffs are now simultaneously in effect. The US-Canada USMCA track remains frozen.
What Renegotiation Is Expected to Cover
Key issues US negotiators have flagged across both bilateral tracks include: automotive content rules and regional value thresholds; restrictions on Chinese-origin inputs in North American supply chains; agriculture (GMO corn, Canadian dairy supply management, Mexican grain reinspection); digital trade and data localization; energy access and critical minerals; enforcement of the Labor Rapid Response Mechanism; and dispute settlement procedures. Senators Katie Britt and Tim Scott have also introduced the Foreign-Trade Zone Export Enhancement Act of 2026, which would allow goods made in US foreign-trade zones to be exported duty-free to Canada and Mexico — addressing a cost disadvantage for companies manufacturing in those zones.
What this means: USMCA is in a sustained period of managed uncertainty. The agreement governs roughly $1.3 trillion in annual trilateral trade, and its core preferences remain in place — but supply chains built around current rules of origin or regional content thresholds face real exposure if those thresholds tighten in renegotiation. Companies trading across all three borders should treat the January 12 comment deadline as an operational moment: it is the formal input channel into the 2027 review. The US-Canada situation, in particular, requires close monitoring — bilateral tariffs on top of an unresolved renegotiation creates compounding cost risk with no clear resolution timeline.
Sources:
- U.S. Declines to Renew USMCA at Six-Year Joint Review: What It Means for Companies — Baker Donelson
- USTR initiates next stage of USMCA review — Supply Chain Dive
- USTR Issues Statement on Status of USMCA Review — Thompson Hine SmartTrade
- USMCA Review 2026: Not Renewed, Still in Force — Mayo Law
- USMCA Joint Review: Background on Prior Negotiations — Congressional Research Service