The United States has declined to support extending the United States-Mexico-Canada Agreement (USMCA) during its first mandatory joint review. The decision does not change current preferential tariff treatment, rules of origin, customs procedures, or other USMCA benefits. Instead, it begins an annual review process that will continue through the agreement’s scheduled expiration in 2036 unless all three countries agree to an extension sooner.
Key Takeaways
- USMCA remains fully in effect.
- Tariffs, customs procedures, and rules of origin are unchanged.
- The United States did not support extending the agreement during the first joint review.
- USMCA will now undergo annual reviews through 2036 unless all three countries agree to an extension before then.
- Importers and exporters do not need to take immediate action, but they should monitor future developments.
How the USMCA Joint Review (Sunset Review) Works
USMCA entered into force on July 1, 2020, with an initial term of 16 years. Under Article 34.7, often referred to as the agreement’s sunset review provision, the United States, Canada, and Mexico are required to conduct a joint review six years after the agreement takes effect. During the review, the three countries evaluate how the agreement is functioning and determine whether they wish to extend it for another 16-year term.
If all three countries agree to an extension, the agreement’s term automatically resets, and the next joint review takes place six years later. Because the United States did not support an extension during this review, USMCA will instead enter an annual review cycle.
What Does This Mean for Importers?
For now, there is no immediate impact on goods that qualify for this free trade agreement. Businesses can continue claiming preferential tariff treatment.
The shift to annual reviews simply creates a recurring opportunity for the United States, Canada, and Mexico to discuss the agreement, consider potential updates and potentially restructure the agreement itself. While no formal amendments have been proposed as part of this process, topics that have been discussed previously—including automotive rules of origin, labor provisions, digital trade, and dispute settlement procedures—could continue to receive attention during future reviews. Business must monitor the possible implications that can be amended by a review and identify any potential impact to their qualification under USMCA.
Separately, the Office of the United States Trade Representative continues to hold discussions with Canada and Mexico on a range of trade issues. Mohawk Global will continue to monitor developments and provide updates as additional information becomes available.
Frequently Asked Questions
Does this mean USMCA is ending?
No. USMCA remains fully in effect, and its provisions continue to apply. The agreement is currently scheduled to remain in force until July 1, 2036, unless the three countries decide to extend it before then.
Will tariffs or customs procedures change now?
No. The decision does not change preferential tariff treatment, customs procedures, rules of origin, or other USMCA requirements.
Can USMCA still be extended?
Yes. Although the United States did not support an extension during the first joint review, the agreement allows the three countries to approve an extension during any future annual review before the current term expires.
If you have questions about how future USMCA developments could affect your supply chain or trade compliance strategy, contact your Mohawk Global representative.