USMCA Faces Potential Overhaul as Trump Considers Bilateral Trade Agreements

Washington, D.C. – The United States government is contemplating significant changes to the United States-Mexico-Canada Agreement (USMCA), potentially leading to the exclusion of Canada and a shift towards bilateral trade agreements with each country. The USMCA, originally enacted during Donald Trump’s first term in July 2020, is scheduled for review in July of this year.

Review and Potential Restructuring

According to reports from The Fresh York Times, US officials suggest the possibility of undoing the current USMCA conditions and establishing separate bilateral agreements with Mexico and Canada. This development comes amid ongoing tensions between the Trump administration and its North American neighbors.

Increased Pressure on Canada

Pressure on Canada has been escalating since January 2025, culminating in a recent threat by Trump to block the inauguration of a new bridge connecting the two countries. On February 9th, Trump stated via social media, “I will not allow this bridge to open until the United States receives full compensation for everything we have given it and, and this is important, until Canada treats the United States with the justice and respect we deserve.”

This threat is widely interpreted as a preliminary move to exert pressure during the upcoming July review of the USMCA. Some analysts view this as a continuation of Trump’s negotiating tactics, similar to those employed during tariff disputes, where initial threats are often followed by concessions.

Potential Economic Consequences

The termination of the USMCA could have adverse economic repercussions for American companies, particularly those in the agriculture and automobile manufacturing sectors, which benefit from trade relationships with Canada. Experts at Ernst and Young (EY) have cautioned that a failure to renew the USMCA would likely lead to increased tariffs and a reduction in Mexico’s Gross Domestic Product (GDP).

Background on USMCA

The USMCA, which U.S. Customs and Border Protection states entered into force on July 1, 2020, replaced the North American Free Trade Agreement (NAFTA). The United States Trade Representative describes the agreement as creating a more balanced and reciprocal trade relationship, supporting high-paying jobs for Americans and fostering economic growth in North America. The International Trade Administration highlights that USMCA is mutually beneficial for workers, farmers, ranchers, and businesses across all three countries.

In 2022, trade in goods and services between the US and its USMCA partners totaled an estimated $1.8 trillion, with exports reaching $789.7 billion and imports totaling $974.3 billion, according to USTR data.

Looking Ahead

The upcoming July review of the USMCA will be a critical juncture for North American trade relations. The outcome will significantly impact businesses and economies across the region, and the potential shift towards bilateral agreements remains a key point of uncertainty.