President Donald Trump indicated on 10 June that the US will not renew USMCA at the 1 July review milestone, repeating his contention to reporters that the US derives no meaningful benefit from its trade relationships with either Canada or Mexico. The remarks could set the stage for a prolonged period of rolling annual reviews, bilateral negotiations and sustained uncertainty for the hundreds of automakers and suppliers whose supply chains depend on the agreement’s terms.

USMCA does not expire in July—its formal end-date is 2036—but the milestone triggers a choice: all three parties can either agree to a 16-year extension, or the agreement enters a cycle of annual reviews that could persist for up to a decade. In the absence of a renewal, USMCA-compliant goods will retain their preferential treatment under that annual framework, but the policy uncertainty created by an unresolved future is itself damaging. 

Trump’s trade officials have not clarified whether the US would consider a full withdrawal, which any party can technically execute with just six months’ notice, or whether the non-renewal posture is designed to extract further concessions from Canada and Mexico before any extension is agreed. It has been widely reported that the US wants to raise the North American content threshold for vehicles to qualify for preferential treatment under USMCA to 82%, with 50% required to originate from the US itself. No US-specific quota exists under the current agreement.

Although virtually all manufacturing industries will be exposed to undesirable changes if USMCA is abandoned, automotive will be the most acutely affected. Indeed, USMCA was explicitly structured to protect integrated North American vehicle and parts manufacturing. The US has already undermined it in practice by imposing 25% Section 232 tariffs on vehicles containing non-US content while leaving USMCA-compliant parts temporarily exempt. 

Canada is not yet part of the formal negotiations, which have so far been conducted bilaterally between the US and Mexico. Prime Minister Mark Carney convened a virtual meeting with provincial and territorial premiers on 10 June, the same day Trump made his remarks. Ontario Premier Doug Ford offered only a vague read to reporters on the government’s position, saying discussions would “continue in good faith”. 

Carney has separately committed Canada to doubling non-US exports over the next decade—a strategic diversification pivot made necessary by the realisation that existing trade dependence on the US has become a liability. Mexico is hedging similarly: it concluded an expanded EU free trade agreement last week covering services, agriculture and investment, mobilising approximately US$5.8bn in EU investment under President Claudia Sheinbaum’s Plan Mexico strategy. On the automotive front specifically, Mexico has also unveiled a state-backed electric vehicle programme, complete with a debut model, in a broader effort to shake off its reputation as a US-dependent regional assembly hub.

Of course, Trump’s framing deserves scepticism. His administration is simultaneously negotiating bilateral side-deals with Mexico and Canada, has scheduled further rounds for June and July, and has not publicly threatened formal withdrawal—the mechanism that would actually terminate USMCA. His track record on international trade includes many such transparent attempts at coercion, and it is noteworthy that this behaviour frequently singles out the US’ closest geopolitical allies.

In this case, non-renewal will trigger annual reviews that give the US a recurring opportunity to extract concessions, without the political and legal exposure of a formal exit. A unilateral withdrawal would face congressional opposition and a Supreme Court challenge over the USMCA Implementation Act, which cannot be repealed by executive action alone.

The automotive industry has borne the ambiguity in concrete terms. Mexico’s automotive exports to the US fell 5.1% in early 2026, and its steel exports—integral to vehicle production—fell 36.6% year-on-year to US$2.24bn last year under existing Section 232 tariffs. Mexico has complained that the current regime leaves its manufacturers at a disadvantage relative to Japan and South Korea, which secured bilateral deals reducing their auto tariffs to 15%. Canada’s aluminium and energy sectors are in a similarly exposed position, with no formal bilateral negotiation yet underway between Washington and Ottawa.

The next formal negotiating rounds are scheduled for 16 and 17 June in Washington, focused on agriculture, and for the week of 20 July in Mexico City. Whether those talks produce movement on the automotive content dispute or the steel and aluminium impasse will determine how damaging the prolonged uncertainty becomes, and whether Trump’s negotiating posture hardens into something that North American manufacturers can no longer plan around.