Trump Tariffs Threaten USMCA Review, Former Trade Negotiators Warn
The threat of the Trump administration's tariff policy looms over the upcoming USMCA review, causing former officials involved in the initial negotiations to warn that the review may turn into a non-stop renegotiation complicated by tariff discussions.
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Speaking at a Washington International Trade Association event, Kenneth Ramos, the former Mexican chief negotiator for USMCA, said that in Mexico, the government's focus has "been primarily on trying to get out of this tariff trap that we face with the Trump administration," which has "taken most of the oxygen out of the room" of a "substantive discussion" on the USMCA review. He said that there is "private sector concern in Mexico" that any results of the tariff negotiations "will definitely impact the [USMCA] review."
Steve Verheul, a former special adviser on Trade Policy to Canada’s Deputy Minister of Finance, agreed, saying that Canada has "a similar challenge" and that "it's a little unclear" how ongoing tariff negotiations "will play into the USMCA review." He said that a "much more in-depth" consultation being planned for early fall will "kind of coincide with what the U.S. is doing on their front" and that the Canadian government will be "trying to prepare for all eventualities."
Ramos said that Mexico must prepare for the possibility that the U.S. "wants renegotiation, not just a review" in 2026. He worried that it might become "part of the strategy of the U.S. to keep the negotiation open," instead of completing the review in 2026, which would mean that "you repeat the exercise in 2027 and so on every year" until the agreement finally expires in 2036. Continuing "throughout the entire period of the Trump administration, with that sword hanging over our heads," would be unfortunate, he said, because of the uncertainty "of not knowing exactly when the tariffs are going to go away, or if we have a long-term extension of the USMCA."
Former House Ways and Means Committee Chairman Kevin Brady of Texas said that market access will "continue to be a key concern" in the USMCA review and that he believes the Trump administration "may target areas where they believe the trilateral framework ... has fallen short of delivering fair and reliable access."
Verheul and Ramos proposed thinking "outside of the box" to find solutions to tackle unfair trading practices and transshipment from China. Verheul said that he believes Canada "would certainly be open to common external tariffs." Ramos proposed the "possibility of engaging in regional trade remedy investigations" instead of individually. He said that "we should think outside the box" and "join efforts in North America to tackle these specific sectors where we clearly see unfair trading practices converge."
Ramos said that the U.S. is currently violating the USMCA because of the provision that "Mexico and Canada would be excluded from national security measures in the automotive sector." He said that during any renegotiation it will be important for Mexico to "obtain an exclusion, a guarantee, that in future investigations on Section 232 that Mexico will not be included."
Brady was more sanguine, calling the review an "opportunity" to strengthen "the existing trade relationship we have with Mexico and Canada" in a way that "both enhances national security and makes us and our trading partners more competitive."