US President Donald Trump Burrell is moving forward with tariff threats on key trading partners in Canada and Mexico, and could be renegotiated for the three-country trade agreement.
During his first term as president, Trump pushed for the North American free trade agreement to be replaced by the current US-Mexico-Canada Agreement (USMCA).
Under Trump’s leadership, the United States added clause 34.7. This requires a joint review of the agreement with the deadline of landing on July 1, 2026 within six years.
The agreement also includes a sunset clause that will invalidate the agreement by 2036 if it is not renewed, and a compulsory consultation with US stakeholders, scheduled to commence in October.
The USMCA doesn’t include much details on what the review looks like, but Vina Nadjibulla, vice president of research and strategy at the Asia-Pacific Foundation in Canada, says Trump wants to completely rewrite the agreement. It seems like you think so.
“President Trump’s tariff threat and his overall language and coercion to Canada are all in the hopes that the USMCA has been completely renegotiated and wants to see much earlier than July or October 2026. I agree,” Najibla told Al Jazeera.
The Trump administration is trying to rewrite numerous trade rules to draw concessions from other countries, boost domestic production and increase government revenue.
Trump’s threat has caused certain surprises in Canada and Mexico, and is currently facing three tariff outlook.
After threatening a 25% tariff on suspicion of not stabilizing the flow of drugs and undocumented immigration across US borders – measures suspended until March 4th – Trump reciprocated this week Customs tariff plans have been announced. Countries that impose taxes on US goods and duties are imposed on all steel and aluminum imports.
“Undoubtedly, USMCA negotiations may be a way to address a wide range of issues, including concerns about steel and aluminum, but that’s not easy,” he told Al Jazeera about geopolitical and macro risks.
Economist Stephen Brown said Trump’s goal was to further improve the conditions for US business. Brown, the deputy North American director of Capital Economics, expects some important changes to the USMCA, including the “rules of origin.”
Currently, the USMCA provides that, for example, 75% of the components in a vehicle must be produced in North America in order to qualify for tax-free trade. In renegotiated agreements, its share could potentially be raised or changed to exclude components produced in certain countries such as China.
Brown also hopes that the US will add similar rules to other high-tech sectors such as aerospace, and that the USMCA review will drive an increase in market share for US businesses.
Mexico and Canada are still restricting market access to US companies in certain sectors, and Brown is restricting access to markets, including agricultural products, banks and telecommunications.
The US probably wants these restrictions to be eased, he said.
Road junction
One question is how Canada and Mexico will move forward.
Will they deepen their trade with the US or if they are worried that they may sacrifice their sovereignty, will they choose to diversify away from the US?
“Canada and Mexico are at the forefront of managing Trump’s new trade war. It was China that was supposed to be, but it’s not. Trump doesn’t distinguish between friends and enemies,” Najibla said. He added that China will increasingly control issues other than trade given issues such as the legal status of Tiktok and the Ukrainian War.
Some Canadian observers hope that revisiting the USMCA could put other tariff threats on Abeyance, but Ziemba said this is not certain.
“But in the end, Trump could be shaken up from US businesses, including manufacturers and construction, facing negative market pressures and higher costs,” she said.
For now, at least in Canada, cross-border threats are reducing their dependence on the US market, seeking “Canadian purchases.”
However, Najibla warned that such independence has economic costs, adding that Ottawa is likely to face “its junctions on the road” within months.
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