USMCA Renewal Talks Set to Miss July 1 Deadline, Adding to North America Trade Uncertainty
Summary
- USMCA renewal talks are set to miss the July 1 deadline, raising the prospect of greater uncertainty over North American trade rules and tariff policy.
- Disagreements over rules of origin and tariffs in the auto industry persist, while a rolling review approach, bilateral talks, and separate side deals are under discussion.
- The USMCA will remain in force, but policy uncertainty is poised to grow around roughly $2 trillion in annual North American trade, as well as auto and manufacturing supply chains and agricultural trade.
Forecast Trend Report by Period
Negotiations to renew the U.S.-Mexico-Canada Agreement are set to extend beyond the July 1 deadline, fueling uncertainty over North American trade rules and tariff policy.
Walter Bloomberg reported on June 5 that the U.S., Mexico and Canada are unlikely to reach a new agreement by the July 1 USMCA renewal deadline.
Disagreements over auto-sector rules of origin and tariffs remain unresolved.
Officials increasingly see a so-called rolling review as the most likely path, instead of extending the existing agreement in a single step. Under that approach, the three countries would repeatedly review and negotiate individual issues.
The U.S. also prefers bilateral talks with Mexico and Canada, along with separate side deals, rather than a formal renewal of the pact, the report said.
The USMCA itself will remain in place. Still, a prolonged negotiation process is poised to increase policy uncertainty around about $2 trillion in annual North American trade.
Markets are watching for signs of progress in the talks because of the potential impact on the broader North American economy, including auto and manufacturing supply chains and agricultural trade.
JH Kim
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