USMCA Review Deadline Arrives | Seeking Alpha

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The deadline for the joint review of the U.S.-Mexico-Canada Agreement is here, and the Trump administration is expected to announce that it will not extend the free trade deal. This could potentially start the process of winding down the 32-year-old North American free trade zone.

What to expect: The deadline for the USMCA’s joint review is today, with trade representatives of the three countries scheduled to meet virtually to decide if the pact should be extended for another 16 years. If they don’t agree on revising or extending the USMCA, the countries will hold annual reviews for the next 10 years. If an agreement is not reached, the pact will expire on July 1, 2036. The USMCA, which replaced the North American Free Trade Agreement in 2020 during Trump’s first term, accounts for about 30% of the world’s GDP. In 2024, trilateral trade totaled around $1.99T. It’s important to note that even if the U.S. decides against renewing the USMCA, this won’t terminate the deal right away.

Mexico’s President Claudia Sheinbaum has called for extending the USMCA for 16 years. Canada also favors extension, but Prime Minister Mark Carney downplayed the possibility of that happening. “We’re expecting a constructive exchange,” he told reporters on Tuesday. “I wouldn’t expect any drama. I’m not looking for my pen.” The U.S. wants to rework the deal with tighter rules of origin for North American-built vehicles, stricter limits on Chinese goods in the region, greater access for U.S. farm exports, among other demands. “I see a prolonged period of negotiation and review likely resulting in a final agreement that looks somewhat like today, but maybe with a couple side-car agreements on rules of origin, supply chains and other issues that the U.S. wants resolved,” said Christian Medeiros, vice president at TD Asset Management.

What’s at stake: Experts flagged the risks of annual reviews over the next decade. “A 10-year expiration window may be a lifetime in politics, but it introduces significant uncertainty for global businesses that make large-scale expansion plans on multi-decade timelines,” wrote Scott Lincicome, vice president of General Economics and Stiefel Trade Policy Center, Cato Institute. “So, on the margins, missing the July 1 deadline will likely reduce North American investment.” He said new rules of origin or labor and environmental conditions would impose new costs on North American businesses. “Compliance costs under USMCA’s existing automotive rules of origin — just documentation, classification and reporting burdens — amount to an invisible 2% tariff on cross-border trade.”

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Today’s Markets

In Asia, Japan +0.6%. Hong Kong closed. China +0.4%. India +0.6%.
In Europe, at midday, London -0.4%. Paris -0.6%. Frankfurt +0.4%.
Futures at 6:30, Dow -0.2%. S&P -0.2%. Nasdaq -0.4%. Crude -1.2% to $68.70. Gold -1.1% to $3,995.50. Bitcoin -1% to $58,657.
Ten-year Treasury Yield unchanged at 4.47%.

On The Calendar

Companies reporting today include General Mills (GIS) and FactSet Research (FDS).

See the full earnings calendar on Seeking Alpha, as well as today’s economic calendar.