U.S., Canada and Mexico begin bumpy negotiations to renew North American trade pact

By — Paul Wiseman, Associated Press Paul Wiseman, Associated Press Leave your feedback Share Copy URL https://www.pbs.org/newshour/world/u-s-canada-and-mexico-begin-bumpy-negotiations-to-renew-north-american-trade-pact Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter U.S., Canada and Mexico begin bumpy negotiations to renew North American trade pact World Jul 1, 2026 4:19 PM EDT WASHINGTON (AP) — Tourists from Chattanooga check into beach resorts in Cancun. Canadian auto parts feed factories in the American Midwest — and vice versa. Happy hour revelers raise glasses of Mexican tequila and mezcal at bars in Seattle. It adds up. The United States trades $1.9 trillion a year — $5 billion a day — worth of goods and services with its neighbors, Canada and Mexico. They have supplanted China as America's top two trading partners. So the stakes are high when it comes to fiddling with the rules that govern trade between the three countries. And after a year of President Donald Trump's chaotic tariff policies, many U.S., Canadian and Mexican businesses would welcome the return of stability across North America. Educate your inbox Subscribe to Here’s the Deal, our politics newsletter for analysis you won’t find anywhere else. They are not likely to get it. The regional trade pact — the U.S.-Mexico-Canada Agreement or USMCA — that Trump negotiated and boasted about in his first term came up for renewal Wednesday, starting a process that is likely to last months, maybe longer. And the path forward is lined with landmines. "There's going to be a lot of drama this summer," Diego Marroquín Bitar, a fellow in the America's program at the Center for Strategic and International Studies, said last week at a USMCA forum sponsored by the Cato Institute. A bumpy road ahead for North American trade The U.S. is making demands that could effectively force Canada and Mexico to surrender some automaking production to the United States. That might bring more auto factory jobs to the United States. But it would also upend established supply chains and would push up U.S. prices for new cars that now average nearly $50,000 at a time when American consumers are already furious about the high cost of living. Trump, characteristically, has added to the tension by threatening to pull out of his own agreement altogether. WATCH: The implications of U.S. allies seeking new economic partnerships In 2020, the USMCA replaced the 1994 North American Free Trade Agreement, which tore down most trade barriers between the three North American countries. Trump and other critics had called NAFTA a job killer because it encouraged U.S. companies to move factories south of the border to take advantage of low-wage Mexican labor, then ship goods back to the United States duty free. His USMCA ended up being similar to NAFTA — though it pressured factories to pay higher wages and make sure that more of what they made originated in North America in an effort to preve