Ask Onix
Canada formally requests USMCA extension
Canada has officially asked the United States and Mexico to renew the United States-Mexico-Canada Agreement (USMCA) for another 16 years, calling the pact a key driver of North American competitiveness. The request comes as the 1 July deadline for renegotiation approaches.
Trade minister highlights mutual benefits
In a notice sent on Tuesday, Canadian Minister of Intergovernmental Affairs, Infrastructure and Communities Dominic LeBlanc described the USMCA-known as CUSMA in Canada-as "highly beneficial" to all three nations. LeBlanc, currently in Washington for talks with U.S. Trade Representative Jamieson Greer, acknowledged room for improvement but stressed Canada's openness to proposals that support long-term prosperity for all parties.
LeBlanc also emphasized the need for parallel discussions on sector-specific tariffs, noting their importance to the broader trade relationship.
Sticking points and U.S. demands
Prime Minister Mark Carney has urged the removal or reduction of U.S. tariffs on Canadian steel, aluminum, automobiles, and lumber. However, Greer has suggested Canada may need to accept some form of U.S. levies as part of any deal.
The U.S. has also pressed for greater access to Canada's dairy market, where strict production quotas and import controls protect local farmers. Additionally, Washington wants to increase the percentage of U.S.-made content in North American vehicles, proposing a 50% threshold. Carney countered that Canadian-made cars already contain roughly that level of U.S. content on average.
Other irritants include Canada's decision to pull American alcohol from provincial shelves in retaliation for U.S. tariffs, a move Greer cited as a hurdle in negotiations. He noted that only Canada and China have retaliated against U.S. trade measures, complicating talks.
Mexico backs extension, U.S. remains cautious
Mexico has also voiced support for renewing the USMCA for 16 years. Economy Minister Marcelo Ebrard stated that while the agreement will remain in effect for years to come, Mexico prefers a longer extension to ensure stability.
President Donald Trump has not commented recently on the trade talks. However, on Monday, he revived his rhetoric about Canada potentially becoming the "51st state," sharing a news article about Canada's economic struggles on Truth Social.
Economic pressures mount at home
Carney acknowledged "some weakness" in Canada's economy during a press briefing on Tuesday but stopped short of confirming a recession. He emphasized the government's focus on building a "stronger, more resilient, and more independent Canadian economy."
Domestic criticism has intensified, with Conservative opposition MPs blaming Carney for lagging economic growth and high youth unemployment. Conservative MP Jasraj Singh Hallan accused the prime minister of being a "grand illusionist" who has failed to deliver on economic promises.
What's next
If the three countries fail to agree on an extension by 1 July, the USMCA will shift to annual renewal until 2036. Negotiations between the U.S. and Mexico have progressed further, while Canada's talks have lagged, partly due to its retaliatory tariffs against the U.S.
