The trade agreement that governs roughly $1.5 trillion in annual commerce across North America is fracturing. US Trade Representative Jamieson Greer has drawn a sharp line between Mexico and Canada in the ongoing USMCA review process, calling Mexico’s approach “quite pragmatic” while effectively accusing Canada of stonewalling.

The US has decided it will not renew the USMCA for another 16 years when the July 1, 2026, deadline hits. Instead, the administration is pivoting to annual reviews and bilateral negotiations.

The great divorce of trilateral trade

The USMCA replaced NAFTA and has been in effect since July 1, 2020. It mandates a review every six years, making the 2026 checkpoint the first real stress test of the agreement. The review was supposed to address trade deficits, rules of origin for auto manufacturing, and long-simmering disputes in sectors like dairy and energy.

Mexico showed up ready to negotiate. Multiple rounds of talks have already taken place, and the next meeting between US and Mexican officials is scheduled for the week of July 20, 2026. Greer’s characterization of Mexico as pragmatic signals that real progress is being made on the American side’s core demands around tariff acceptance and market access.

Canada, not so much. Prime Minister Mark Carney has rejected additional concessions to advance the talks. Greer’s public framing of Canada as offering “no concessions” is the diplomatic equivalent of airing dirty laundry on the front porch.

The practical consequence is that the US appears ready to finalize terms with Mexico first, potentially leaving Canada with a take-it-or-leave-it deal. Trade attorney Patrick Childress has warned that Canada may find itself at a significant disadvantage if the US and Mexico reach an agreement independently.

The supply chain domino effect

The industries most exposed to USMCA disruption are automotive manufacturing and agriculture, both of which rely heavily on cross-border integration between the US, Mexico, and Canada. Rules of origin requirements for automobiles, which dictate how much of a vehicle must be produced within USMCA countries, are a central point of contention.

The shift to annual reviews instead of a 16-year renewal cycle means this uncertainty isn’t a one-time event. Markets will need to price in recurring trade policy risk on a yearly basis, a fundamentally different regime than the relative stability that NAFTA and early USMCA provided.