President Trump has expressed doubts about extending the United States-Mexico-Canada Agreement (USMCA), which he himself helped negotiate. The agreement is due for review this year, but despite returning to power, Trump is uncertain about its future.
Trump’s position on USMCA
Speaking at the White House, Trump stated:
“I’m not going to extend it. I don’t know if I’ll extend it, because the US doesn’t need anything that Canada or Mexico can offer.”
He also emphasized that both countries are more dependent on the US and complained about the trade deficit, which he wants to turn into a surplus. According to him, Americans do not need Canadian cars, lumber, or energy resources, but negotiations with partners are ongoing.
Possible changes to the agreement
While Trump’s words should not be taken literally, it is clear that he aims to increase pressure on Canada and Mexico to secure more favorable terms. Earlier reports indicated that the agreement might not disappear but could undergo significant modifications. Specifically, the administration wants to raise the required North American content of parts from 75% to 82% for preferential treatment. More importantly, at least 50% of that value must come from the US.
This is a substantial change, as the current agreement requires only 40-45% “core parts” from high-wage countries like Canada or the US. In effect, the US may try to sideline Canada, and there are suggestions that the bulk of negotiations are focused on Mexico.
Impact on the automotive industry
It is difficult to predict how things will unfold, but the US and Canada remain in conflict, and canceling USMCA would only worsen the situation. This could severely hit the auto industry, as many companies have factories in Canada and Mexico, leveraging the benefits of the agreement. If it is canceled, import prices could skyrocket, and consumer choice would significantly shrink.
The White House
At the same time, as the saying goes, “Trump always backs down,” so this could just be loud rhetoric without real action. However, even the president’s words create uncertainty for businesses that depend on stable trade relations in North America. Automakers will have to prepare for potential changes, and consumers for a possible rise in car and parts prices if the agreement is not renewed or undergoes radical modifications.