U.S. President Donald Trump is expected to formally declare on July 1 (Canada Day) that he will not extend the U.S.-Mexico-Canada Agreement on trade.
The move will start a decade-long wind down of the 32-year-old North American free trade pact between the U.S., Canada, and Mexico.
That declaration by Trump will reportedly kickoff a six-year review of the current trade agreement, part of a “sunset clause” negotiated by Trump during his first term in office.
The announcement by Trump comes amid negotiations aimed at renewing the free trade deal. Analysts appear divided over whether the declaration is legitimate or a U.S. negotiating tactic.
So far, Canada and Mexico have balked at sweeping demands to boost U.S. content in North American-made vehicles and trade protections to block Chinese goods.
Trade negotiators from the U.S., Mexico, and Canada are expected to meet virtually on July 1 and declare whether they want to extend the pact for another 16 years.
U.S. Trade Representative Jamieson Greer has scheduled a third round of negotiations with Mexico for the week of July 20 that does not include Canada.
For now, the U.S. is planning to hold formal negotiations with Mexico only, leaving Canada on the sidelines.
The U.S. is apparently angry with Canada over a long list of bilateral trade irritants, including Canada's restricted dairy market and Canadian ?provinces pulling American liquor from stores.
Failure to reach agreement on revisions to the current free trade deal would lead to it formally expiring on July 1, 2036.
The sunset process is different from a termination clause that could trigger a U.S. withdrawal from the trade agreement within six months.
Trump has said frequently that he doesn’t like free trade with Mexico and Canada, favouring the steep tariffs that he has imposed on Mexican and Canadian steel and aluminum products.
However, several U.S. industries are lobbying hard for the Trump administration to maintain free trade with Mexico and Canada.
The agriculture, automotive, and mining sectors have each lobbied for renewal of the trade pact, arguing that ending the free trade agreement will hurt American producers.
