Canada proposes 16-year USMCA renewal to bypass annual reviews

Canada formally proposed renewing the United States-Mexico-Canada Agreement for 16 years on Tuesday, seeking to lock in long-term trade stability and bypass the mandated annual review process that would otherwise begin next month.

Dominic LeBlanc, Canada's minister responsible for U.S. trade, sent a letter to U.S. Trade Representative Jamieson Greer and Mexico's Economy Minister Marcelo Ebrard recommending the extension. "The Agreement is highly beneficial to each of our countries and to the integrated North American economy," LeBlanc wrote, according to a copy of the letter reviewed by Reuters.

LeBlanc and Canada's chief trade negotiator, Janice Charette, are in Washington on Tuesday for a meeting with Greer. The trilateral pact, which replaced NAFTA in 2020, faces a mandatory joint review by July 1 that could trigger annual reviews through 2036 if all three parties do not agree to extend it. Canada's proposal would replace that cycle with a single 16-year renewal.

The push comes as Canada lags behind Mexico in engaging with the Trump administration. The U.S. and Mexico concluded their first round of bilateral USMCA talks last week, covering automotive rules of origin, steel and aluminum trade, and economic security. Businesses have criticized Ottawa for moving too slowly, while Trump suspended all talks with Canada late last year after Ontario aired an advertisement featuring former President Ronald Reagan warning about tariffs.

Tariffs remain the central friction point. The U.S. has imposed duties on Canadian steel, aluminum, and autos that have hurt the economy, LeBlanc noted in his letter, saying parallel discussions on sectoral tariffs will be essential. Greer has indicated Canada may have to accept some tariffs to engage on the broader review, and has pushed for stricter automotive rules of origin and greater access to Canadian dairy markets. Restrictions on liquor sales from Canadian provinces have also been a source of tension.

Prime Minister Mark Carney acknowledged the challenges Tuesday, saying the U.S. has about 30 trade irritants with Canada compared with nearly 60 with Mexico. "There is a possibility of a new partnership there," Carney told reporters. The comments came a day after Trump posted "51st State!" on social media linking to a report that Canada is falling into a technical recession — a remark Ontario Premier Doug Ford dismissed, saying "Canada will never be the 51st state."

Mexico has reiterated its support for the 16-year extension. "Mexico's intention and position is that the treaty should be extended," Ebrard said Tuesday. "Keep in mind that the treaty will remain in effect for many more years, but we would like it to be extended to 16 years."

The stakes are significant for North American supply chains. The USMCA governs roughly $1.8 trillion in annual trilateral trade, with Canada and Mexico each accounting for more than $600 billion in two-way goods trade with the U.S. A failure to extend the pact would reintroduce annual reviews, creating recurring uncertainty for cross-border industries from auto manufacturing to agriculture. The U.S. could also withdraw from the agreement with six months' notice, though that remains an unlikely scenario.

If all three countries agree to the 16-year renewal, the pact would remain in force through 2042 without further mandatory reviews — a outcome that would remove a major source of trade policy uncertainty for businesses across North America.

This article is for informational purposes only and does not constitute investment advice.