[CTC] Trump Prepares to Start North American Trade Deal Renegotiation

[Arthur Stamoulis]

*Trump Prepares to Start North American Trade Deal Renegotiation
<https://www.wsj.com/economy/trade/trump-prepares-to-start-north-american-trade-deal-renegotiation-304e0292>*

Wall Street Journal

09/04/2025

By: Gavin Bade, Santiago Pérez, and Vipal Monga


The U.S. is preparing to start renegotiating its largest free trade
deal—the U.S.-Mexico-Canada Agreement.


Within the next month, the Office of the U.S. Trade Representative will
begin public consultations on renegotiating the deal, which it must do by
Oct. 4 under the 2020 law that implemented the pact. A request for comment
from companies and unions could be issued as soon as this week, say people
familiar with the administration’s thinking, though President Trump’s team
has previously indicated to stakeholders that a request was close, before
pushing back the release date.


The beginning of consultations will be the first official act in what is
likely to be a monthslong process to renegotiate a deal that Trump signed
in 2020 and which contains a mandatory six-year review. Following a
petition for comments, the administration is required to hold at least one
public hearing and brief Congress on the deal in January 2026, before
holding the first official trilateral USMCA review meeting by July 1, 2026.


The USMCA deal was touted as one of the central trade achievements of
Trump’s first term. The pact replaced the 1992 North American Free Trade
Agreement, which he denigrated on the campaign trail for having sent U.S.
factories and jobs to the other trading partners, particularly Mexico.


Despite that, Trump has undermined USMCA in his second term by
imposing—then paring back—stiff tariffs on Canada and Mexico, arguing that
the duties are justified because of drug trafficking through each of the
countries. Trump originally imposed a 25% tariff on the countries shortly
after taking office, before exempting goods that comply with the agreement.
Part of the aim of those tariffs was to maximize U.S. leverage in the
renegotiation process and try to move it forward more quickly, The Wall
Street Journal reported in January.


Mexico and Canada are the two largest U.S. trading partners, and numerous
industries such as automaking have developed sophisticated continental
supply chains that have been disrupted by Trump’s tariffs. Despite a
carve-out for USMCA-compliant goods, large chunks of trade between the
countries remain exposed to the tariffs.


The trade representative’s office declined to comment and the White House
didn’t respond to a request.


Canadian Prime Minister Mark Carney spoke Monday evening with Trump. They
discussed trade, among other topics, and the countries “are making
progress,” Carney said in comments on Wednesday.


In addition to the tariffs based on fentanyl trafficking, the U.S. has
levied tariffs on Canadian steel and aluminum, automobiles and lumber,
among other sectors. Canada is trying to ease some of those tariffs, but
Carney said he wasn’t expecting an imminent deal. A large portion of the
trade between the countries remains exempt from duties because it is
covered by the USMCA, Carney noted.


The imminent start of consultations comes after Secretary of State Marco
Rubio met Wednesday with Mexican President Claudia Sheinbaum. Cross-border
security coordination led the agenda at the ornate National Palace in
downtown Mexico City.


A deal on security to bolster the U.S. war on drugs is widely seen as a
prerequisite for broader agreements on trade after Trump threatened to
impose punitive tariffs on Mexican goods if the Sheinbaum administration
didn’t step up efforts to fight drug trafficking.


Rubio highlighted Mexico’s cooperation and willingness to engage with the
U.S. government. Mexico is the top trading partner of the U.S., with about
80% of its exports heading to the U.S.


In August, Trump agreed to extend for 90 days the existing tariffs on
Mexican goods because the “complexities of a deal with Mexico are somewhat
different than other nations.” These include tariffs on cars, steel and
aluminum but not on other goods that comply with USMCA content rules.


Sen. Bernie Moreno (R., Ohio), a Trump ally, said he expects the
administration to push for higher requirements for U.S. content in many
goods, especially automobiles.


“You have to up the U.S. content dramatically, especially in the automobile
industry,” Moreno said Thursday outside the Senate chamber. “In fact,
that’s one of the things I talked to the Mexican leadership about is a
recognition that there’s just going to be a lot less cars made in Mexico
that end up in the U.S.”


The U.S. trade representative’s office has said that other barriers include
Mexico’s energy policies favoring state-run companies, lack of a level
playing field in the telecommunications market, restrictions on U.S. corn
and cotton imports and weak copyright protections.


“I can see that the coming months and the review of the USMCA won’t be
easy,” Mexico’s Economy Minister Marcelo Ebrard said on Wednesday after
meeting with U.S. trade and commerce officials. “But we need each other to
be competitive.”


Write to Gavin Bade at gavin.bade at wsj.com, Santiago Pérez at
santiago.perez at wsj.com and Vipal Monga at vipal.monga at wsj.com
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