Washington Lets USMCA Slide Into Annual Reviews – And Reshapes the Hemisphere’s Trade Map

Rio Times · Analysis

Key Facts

—What happened The US declined to renew USMCA for another 16 years, triggering annual reviews until the pact expires in 2036.

—The stakes Nearly $2 trillion in annual North American goods and services trade now sits under permanent negotiation.

—Tariffs stay Washington says levies on Canada and Mexico remain until the trade deficit narrows, with steel and aluminium hardest to unwind.

—The split Mexico is negotiating; talks with Canada have barely begun after last year’s tariff retaliation soured ties.

—The China angle Greer wants tighter rules of origin and external-tariff coordination to squeeze Chinese content out of North American supply chains.

—Latin America read A hemisphere-first sourcing push could pull Mexico closer to Washington and reshape nearshoring bets across the region.

*Washington has quietly refused to renew USMCA, pushing North America into a decade of annual trade reviews that turns nearly $2 trillion in commerce into a permanent negotiation – and puts Latin America’s nearshoring dream on the table.*

A Decision Made by Not Deciding

North America’s trade order changed this week not with a rupture but with a shrug. Washington simply declined to confirm it wanted USMCA to continue in its current form.

Under the original pact, the three countries had to decide by 1 July 2026 whether to extend the deal for another 16 years. Because the US declined to do so, the USMCA will remain in force until July 1, 2036, unless the three countries reach a replacement agreement sooner.

Instead of extension, the deal now moves to yearly reviews. “We are not going to rubber-stamp renewal, not in its current form,” a senior US administration official told reporters, opting instead to conduct annual reviews of the deal’s conditions until its term expires in 2036, paving the way for sweeping renegotiations that could upend nearly $2 trillion in annual goods and services.

This is the first time such a review clause has ever been triggered in a US trade agreement. It was designed as a safety valve; it has become a lever.

For readers in Brazil and across Latin America, the mechanics matter less than the message: the biggest trade bloc in the hemisphere is now a work in permanent progress.

What Greer Actually Wants

The US Trade Representative, Jamieson Greer, has been blunt about the goal. He frames it around a single number – the deficit.

The Trump administration “will continue to engage with Mexico and Canada to address the Agreement’s shortcomings,” US Trade Representative Jamieson Greer said on Wednesday. The word “shortcomings” is doing heavy lifting.

Greer has argued the review is no formality. He stated that “the shortcomings [of USMCA] are such that a rubberstamp of the Agreement is not in the national interest.”

There has been movement in Washington’s direction, by its own accounting. The trade deficit with USMCA partners has decreased by 24% since April 2025, according to Greer.

That’s a meaningful decline, but apparently not enough to warrant lifting the tariffs.

The ambition goes beyond numbers to the architecture of production itself. Renegotiations are expected to focus on measures that encourage more US manufacturing; one such condition could require that half of a vehicle’s components be made in the United States for that company to receive reduced tariff rates.

That is a direct challenge to the cross-border factory networks that have defined North American industry for three decades.

The Tariffs That Aren’t Going Anywhere

The central hard fact is that tariffs are staying. This is the leverage, and Washington is not putting it down.

Greer says tariffs on Canada and Mexico will remain until the trade deficit is resolved, with the USMCA review set for July 2026. That timeline has now arrived, and the levies remain.

Some sectors look immovable. The senior US administration official told reporters that it is hard to envision relief for tariffs on steel and aluminum since the goal is to reduce the US trade deficit.

The pain is real for the northern partner. The US imposed tariffs on steel, aluminium, and cars that have hurt Canada’s economy.

For Latin American exporters watching from the outside, the lesson is sobering: even a signed, ratified free-trade agreement offers no guarantee against tariffs when Washington decides the politics demand them.

The era of assuming duty-free access as a permanent fact of hemispheric life is, for now, over.

Mexico In, Canada Out in the Cold

The most striking feature of the standoff is how differently the two partners are being treated. Mexico is at the table; Canada is barely in the room.

One of the more interesting dynamics in Greer’s comments was the distinction drawn between Canada and Mexico. The USTR indicated that separate discussions with each country are likely, with Mexico described as showing more openness to dialogue.

Talks with Mexico are already advancing on a schedule. The United States and Mexico have already begun such talks, with a third round scheduled to kick off in Mexico City on July 20.

Canada’s path is far rockier, and the reasons are recent and raw. Similar conversations with Ottawa have yet to begin, as Trump’s tariffs and repeated threats to make Canada the United States’ “51st state” have damaged bilateral ties.

Greer’s own framing puts Canada in unwelcome company. “Two countries in the world retaliated against us: The People’s Republic of China and Canada,” he said.

For Mexico, cooperation is fast becoming the price of staying inside the hemisphere’s economic core – a calculation Latin American capitals will study closely.

The China Subtext Everyone Should Read

Beneath the deficit talk sits the real strategic prize: pushing China out of North American supply chains. This is where the story turns global.

Greer has been explicit about the mechanism. He added that negotiations would also focus on external tariff coordination, with the goal of reducing the amount of Chinese products entering US supply chains through Canada and Mexico.

There is even a carrot attached to the stick. The US sees a path to preferential tariff rates in North America if Canada and Mexico co-operate with external tariffs on other countries.

The underlying doctrine is hemispheric. “For national security reasons …

I want to have our supply chain sourced from this hemisphere,” Greer said in May.

But Washington faces a delicate balance. The United States will have to walk a fine line between demanding that Mexico and Canada pursue trade reforms and not pushing both countries into China’s arms.

For Latin America, this is the throughline: a US that wants to reshore to the Americas could either lift the region up or force it to choose sides.

The Latin America Read-Through

This is not just a North American story. It is a preview of how Washington will treat every trade partner in the hemisphere.

If a fully ratified deal like USMCA can be reduced to annual reviews, no Latin American trade arrangement can be treated as settled. Certainty has become a variable.

The nearshoring bet – the idea that factories fleeing Asia would land in Mexico and, by extension, spread opportunity across the region – now depends on the fine print of rules of origin. Higher US-content thresholds could hollow out the very advantage Mexico was selling.

There is opportunity, too. A genuine hemisphere-first sourcing drive could pull investment toward Brazil, Colombia and Central America if they can meet content and security demands.

Yet the same drive could force uncomfortable choices about Chinese investment, which has become a pillar of infrastructure and commodity financing across South America.

The countries that read Washington’s intentions earliest – and position their industries accordingly – stand to gain the most from the reshuffle.

Congress, the Courts and the Limits of Leverage

Washington’s hand is strong but not unchecked. Two forces could reshape how far the administration can push.

The courts have already intervened once. A US Supreme Court decision in February that rejected Trump’s sweeping global tariffs has stymied these efforts, forcing the administration to seek alternate methods to make Mexico City and Ottawa pay up.

Triggering annual reviews is, in part, a workaround. By triggering yearly reviews of USMCA, Washington opens the door for new trade negotiations with its neighbors.

Congress also has a formal role, one it fought hard to keep. A key issue for the 119th Congress is a scheduled July 2026 “joint review” of USMCA, specified within the “review and term extension” provision – the first time such a provision has been included.

Lawmakers can demand consultation and oversight, which means the renegotiation will play out partly in public, partly in committee rooms.

For Latin American governments, that transparency is a rare gift: the terms of North America’s future trade order will be visible, and worth watching line by line.

Scenarios: Three Ways This Could Go

The next twelve months will decide whether this is a managed renovation or a slow-motion breakup. Three broad paths are visible.

In the smoothest scenario, Mexico strikes a bilateral accommodation, accepts tougher content and external-tariff rules, and locks in preferential access. Canada eventually follows, and the bloc survives in modified form.

In the middle scenario, annual reviews become a permanent state of anxiety. Investment slows, supply chains hedge, and firms delay big commitments because nothing feels final.

In the harshest scenario, talks with Canada collapse into open trade conflict, tariffs escalate, and the trilateral idea fractures into two uneasy bilateral tracks.

Any of these outcomes ripples south. A stable, reshoring-friendly North America is an opportunity for Latin American suppliers; a fractured, protectionist one is a warning.

Either way, the comfortable assumption that hemispheric trade rules are fixed has been retired – and the region that adapts fastest will define the next decade of commerce in the Americas.

Frequently Asked Questions

Did the US cancel USMCA?

No. Washington declined to renew it for another 16 years, which triggers annual reviews. The agreement remains in force until 2036 unless a replacement is agreed sooner.

Are tariffs on Mexico and Canada still in place?

Yes. Greer has said tariffs stay until the trade deficit narrows, and relief on steel and aluminium looks especially unlikely in the near term.

Why does this matter for Latin America?

It signals how Washington will treat trade partners across the hemisphere, reshapes the nearshoring calculus, and raises pressure on the region over Chinese investment and supply chains.

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