Donald Trump, long before he became president, criticized trade deals between the United States and most every other country in the world as wildly unfair to us. That stance didn’t change when he became president in 2016, and it hasn’t changed in his second term.
The United States–Mexico–Canada Agreement (USMCA) is a trade treaty among the three countries that has been in effect since 2020, replacing the North American Free Trade Agreement (NAFTA). However, its future is now uncertain as the Trump administration has reportedly chosen not to renew the agreement. This decision will lead to new negotiations among the United States, Canada, and Mexico:
The Trump administration has decided not to renew its trilateral trade pact with Canada and Mexico, instead opting to conduct annual reviews of the treaty that President Donald Trump once called “the best agreement we’ve ever made.”
The widely anticipated decision on the United States-Mexico-Canada Agreement, known as USMCA, was revealed Wednesday, the deadline for the three North American trade partners to determine whether they would renew their agreement for another 16-year term.
The decision means the USMCA will stay in effect for another decade, provided no member tries to withdraw from it. But it also triggers yearly reviews that could result in the renegotiation of major parts of the treaty.
Frankly, this really isn’t a bad idea. We all know how markets are anything but stable during even the best of times. A periodic review of the agreement could actually be profitable for all parties. And, at president, Trump isn’t happy with some of our trade deals as they currently stand:
Trump “chose not to rubber stamp a USMCA renewal without addressing existing issues,” a senior administration official told reporters in a call announcing the move.
“In other words, the United States did not agree to renew the USMCA in its current form,” the official said. “So, as a result, the USMCA is not renewed.”
Trump’s “primary” concern with USMCA centers on the U.S.? trade deficits with the two trading partners, according to the official.
Again, Trump has always thought our trade deals benefited other countries before benefiting us. So this isn’t a surprise.
Trump, meanwhile, has hinted in the past that the USMCA could be re-negotiated or ditched, depending on factors:
Trump is right: These two countries don’t really have anything we need or don’t already make. But there are lots of things we have that they need – like currency:
These two nations are the United States’ largest trade partners, even more than China. Mexico is the largest, with total trade nearing a trillion dollars a year. Canada is a close second, coming in at $760-877 billion. China is a not-that-close third, at $580-$660 billion a year. The European Union comes in at $1.5 trillion combined, but they only beat out Canada and Mexico if you lump them all together.
Even the best trade partners should occasionally sit down together and discuss their agreements. It seems that’s what’s happening in this case. Moreover, the best deals are those in which both sides benefit. After all, President Trump understands how to make deals effectively.
