The U.S. decision not to extend the USMCA came as no surprise, The Wall Street Journal reported. President Trump has imposed tariffs on goods covered by the agreement he signed in his first administration and has suggested he could terminate the deal entirely, the Journal reported.
Wednesday marked the deadline for the three countries to extend the pact for 16 years, something both Canada and Mexico were eager to do, according to the Journal. Instead, the U.S. refusal means American trade representatives will have to meet every year for a decade with Mexican and Canadian officials to continually review the deal. Negotiations can continue in the interim.
The USMCA governs nearly $2 trillion in annual trade across North America. Last year, combined U.S. exports to Mexico and Canada surpassed $670 billion, according to U.S. trade statistics cited by the Journal. By comparison, U.S. exports to China totaled about $106 billion over the same period.
The annual review process adds a layer of uncertainty for businesses that manufacture products and move goods across the world’s busiest export borders. The U.S. refusal keeps negotiations over changes to the deal alive while subjecting the pact to yearly reassessment.