{"id":19228,"date":"2026-07-01T13:31:53","date_gmt":"2026-07-01T13:31:53","guid":{"rendered":"https:\/\/siliconvalleymovingpost.com\/?p=19228"},"modified":"2026-07-01T13:31:53","modified_gmt":"2026-07-01T13:31:53","slug":"us-canada-mexico-begin-bumpy-negotiations-to-renew-north-american-trade-pact","status":"publish","type":"post","link":"https:\/\/siliconvalleymovingpost.com\/?p=19228","title":{"rendered":"US, Canada, Mexico begin bumpy negotiations to renew North American trade pact"},"content":{"rendered":"
\n

By PAUL WISEMAN, AP Economics Writer<\/strong><\/p>\n

WASHINGTON (AP) \u2014 Tourists from Chattanooga check into beach resorts in Cancun. Canadian auto parts feed factories in the American Midwest \u2013 and vice versa. Happy hour revelers raise glasses of Mexican tequila and mezcal at bars in Seattle.<\/p>\n

Read more Writer E. Jean Carroll calls for Trump to pay $5.8M after high court appeal fails<\/a><\/p>\n

It adds up. The United States trades $1.9 trillion a year \u2014 $5 billion a day \u2014 worth of goods and services with its neighbors, Canada and Mexico. They have supplanted China to become America\u2019s top two trading partners.<\/p>\n

So the stakes are high when it comes to fiddling with the rules that govern trade between the three countries. And after a year of President Donald Trump\u2019s chaotic tariff policies, many U.S., Canadian and Mexican businesses would welcome the return of stability across North America.<\/p>\n

They are not likely to get it.<\/p>\n

The regional trade pact \u2014 the U.S.-Mexico-Canada Agreement or USMCA \u2014 that Trump negotiated and boasted about in his first term comes up for renewal Wednesday, a process that is likely to last months, maybe longer.<\/p>\n

And the path forward is lined with landmines.<\/p>\n

\u201cThere\u2019s going to be a lot of drama this summer,\u201d Diego Marroqu\u00edn Bitar, a fellow in the America\u2019s program at the Center for Strategic and International Studies, said last week at a USMCA forum sponsored by the Cato Institute.<\/p>\n

\n<\/div>\n

A bumpy road ahead for North American trade<\/h4>\n

The U.S. is making demands that could effectively force Canada and Mexico to surrender some automaking production to the United States. That might bring more auto factory jobs to the United States. But it would also upend established supply chains and would push up U.S. prices for new cars that now average nearly $50,000 at a time when American consumers are already frustrated about the high cost of living.<\/p>\n

Trump, characteristically, has added to the tension by threatening to pull out of his own agreement altogether.<\/p>\n

In 2020, the USMCA replaced the 1994 North American Free Trade Agreement, which tore down most trade barriers between the three North American countries.<\/p>\n

Trump and other critics had called NAFTA a job killer because it encouraged U.S. companies to move factories south of the border to take advantage of low-wage Mexican labor, then ship goods back to the United States duty free.<\/p>\n

\n<\/div>\n

His USMCA ended up being similar to NAFTA \u2014 though it pressured factories to pay higher wages and make sure that more of what they made originated in North America in an effort to prevent Chinese products from slipping across regional borders duty free.<\/p>\n

North America trade deal comes up for renewal every six years<\/h4>\n

The USMCA included a novel provision requiring the pact to be renewed every six years. That deadline is Wednesday, but \u201cnothing is going to happen July 1,\u201d said Oscar Ocampo, director of economic development at the Mexican Institute for Competitiveness.<\/p>\n

Negotiators could agree Wednesday to renew USMCA as it is for another 16 years. But that is considered highly unlikely. Instead, they are expected to keep working on ways to improve it; they have until 2036 to reach an agreement \u2014 or the pact expires.<\/p>\n

Meantime, any USMCA country can pull out of the pact provided it gives its two partners six months\u2019 notice \u2014 a red buzzer that Canada and Mexico, dependent on trade with the United States, fear Trump just might push.<\/p>\n

Trump, after all, said in June that he was \u201cnot looking to renew\u2019\u2019 the trade pact with Canada and Mexico. \u201cWe don\u2019t need anything that they have,\u201d he said.<\/p>\n

Ocampo suspects that Trump doesn\u2019t really want to drop the treaty; he just wants to use the uncertainty to keep pressure on Mexico over security and immigration issues.<\/p>\n

Canada is out in the cold \u2014 so far<\/h4>\n

The United States and Mexico have held talks on renewing the trade agreement. But Canada has so far been stuck on the sidelines.<\/p>\n

Patrick Childress, a partner at the Holland & Knight law firm and a former U.S. trade negotiator, said: \u201cThe danger for Canada is this: that the U.S. government and the Mexican government reach agreement on changes to core provisions of the treaty and then show up in Ottawa and say: \u2018Here\u2019s what we\u2019ve agreed to. You can take it or leave it.\u2019\u2019\u2019<\/p>\n

Canadian Prime Minister Mark Carney said that the three trading partners plan to meet virtually on Wednesday, adding: \u201cI\u2019m not looking for my pen.\u201d<\/p>\n

Carney later said in French his priority is to do an update to USMCA and that it is impossible for the U.S. to have a new agreement without the approval of Congress.<\/p>\n

Read more Trump will visit newly built Theodore Roosevelt Presidential Library in North Dakota\u2019s Badlands<\/a><\/p>\n

Pushing production to the United States<\/h4>\n

The U.S. wants a refreshed trade pact to do more to make sure that Chinese goods don\u2019t get in through the back door. But the most contentious issue is a U.S. push to require that more products are made in North America \u2014 and specifically the United States.<\/p>\n

USMCA included a requirement that automotive products must be 75% made in North America \u2014 up from 62.5% under NAFTA \u2014 to qualify for duty-free treatment.<\/p>\n

The U.S. wants to push the 75% threshold even higher but it won\u2019t be easy. Automakers already \u201chave been fine-tuning their supply chains for years to be able to hit that 75% mark,\u201d Childress said. They would need time to meet the higher standard.<\/p>\n

The U.S. is also seeking a brand-new requirement: that 50% of cars be made in the United States, Carney confirmed in early June. Currently, none of the USMCA countries gets a guaranteed share of production. \u201cIt\u2019s a red line for both Mexico and Canada, and it goes against the spirit and the letter of regional integration,\u201d Ocampo said.<\/p>\n

Marcos Carias, an economist at the credit insurer Coface, said only 1 in 5 Mexican and Canadian cars imported into the United States would currently meet the 50% standard.<\/p>\n

Vehicle models likely to be hit with higher costs under the plan, he said, include Ford\u2019s Maverick compact pickup truck, Chevrolet\u2019s mid-size Equinox SUV and some Nissan sedans \u2014 all made in Mexico. Carias\u2019 \u201cback of the envelope\u201d calculations suggest that prices could increase 5% \u2013 7% on the most-affected models.<\/p>\n

Businesses want stability<\/h4>\n

A lot of companies just want relief from Trump\u2019s ever-changing tariffs. \u201cMy interest in this USMCA renewal is just consistency, right?\u201d said Shawn Miller, co-founder of PKGD Group, which imports agave spirits (tequila, mezcal and raicilla) from family producers in Mexico. \u201cIf the rules change, the rules change. But we\u2019d really like to know (what they\u2019re going to be) and we\u2019d like them to stay that way for a while.\u201d<\/p>\n

Business is booming for PKGD. Sales at the Holland, Michigan-based firm are up 62% so far this year after surging 100% in 2025 and 300% in 2024.<\/p>\n

But last year was chaotic.<\/p>\n

Trump hit Mexican and Canadian goods with a 25% import tax in February only to turn around a month later and exempt products that were eligible for preferential USMCA treatment. The USMCA allows the Mexican spirits into the United States duty free.<\/p>\n

Amid the tumult, three truckloads of Mexican spirits imported by PKGD crossed the border into the United States and got hit with the 25% tariff. The cost came to $105,000. \u201cFor us, it was one unfortunate day!\u201d Miller said.<\/p>\n

Not knowing what tariffs Trump might conjure up next, PKGD huddled with its Mexican producers to figure out how to respond. \u201cWhat can we absorb? What can they absorb?\u201d Miller said. \u201cHow can we mitigate this?\u201d<\/p>\n

Miller said he and his Mexican suppliers \u201care not large multinational corporations with dedicated trade departments, teams of lawyers, or lobbyists focused on trade policy.\u201d<\/p>\n

Kerry Mellin can sympathize.<\/p>\n

In 2014, the veteran Hollywood costume designer started a business in Ventura County, California, selling silicone grips that enable people with disabilities (such as cerebral palsy and Parkinson\u2019s) to hold things \u2014 spoons, cups, pens, toothbrushes.<\/p>\n

But sales floundered when she introduced her EazyHold grips in Canada, where she has dual citizenship. She thinks it\u2019s because the silicone she imports from Asia kept her grips from having enough North American content to qualify for USMCA\u2019s duty-free treatment when they crossed the border from the United States.<\/p>\n

Mellin suspects EazyHold could meet the USMCA standards, \u201cbut the rules are complex and unpredictable enough that I genuinely can\u2019t be sure without hiring a trade attorney.\u201d<\/p>\n

Mellin believes the USMCA\u2019s rules of origin should be loosened, not tightened, to help small businesses that can\u2019t afford costlier raw materials from North America.<\/p>\n

\u201cI do understand why the rule exists \u2014 to stop companies from routing Chinese goods through Mexico,\u201d she said. \u201cI just wish it could tell the difference between that and a small family business in California making grip aids for people who can\u2019t hold a fork. I\u2019m not the problem they were trying to solve.\u201d<\/p>\n

AP Writers Maria Verza in Mexico City and Rob Gilles in Toronto contributed to this story.<\/em><\/p>\n

Read more Americans step out for their nation\u2019s 250th in a proud moment sown with division and doubt<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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