United States–Mexico–Canada Agreement
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The Agreement between the United States of America, the United Mexican States, and Canada (USMCA)Each signatory has a different name for the agreement—in the United States, it is called the United States–Mexico–Canada Agreement (USMCA); in Canada, it is the Canada–United States–Mexico Agreement (CUSMA) in English and the (ACEUM) in French; and in Mexico, it is called (T-MEC) in Spanish. is a
free trade agreement A free trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating state (polity), states. There are two types of trade agreements: Bilateralism, bilateral and Multilateralism, m ...
among the United States, Mexico, and Canada, in effect from . It replaced the
North American Free Trade Agreement The North American Free Trade Agreement (, TLCAN; , ALÉNA), referred to colloquially in the Anglosphere as NAFTA, ( ) was an agreement signed by Canada, Mexico, and the United States that created a trilateral trade bloc in North America. The ...
(NAFTA) implemented in 1994, and is sometimes characterized as "NAFTA 2.0", or "New NAFTA", since it largely maintains or updates the provisions of its predecessor. The region including Canada, Mexico, and the United States is one of the world's largest free trade zones, with a population of more than 510 million people and an economy of $30.997 trillion in nominal GDP – nearly 30 percent of the global economy, and the largest of any
trade bloc A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating states. Trade blocs can be stand-alo ...
in the world. All sides came to a formal agreement on , and U.S. president
Donald Trump Donald John Trump (born June 14, 1946) is an American politician, media personality, and businessman who is the 47th president of the United States. A member of the Republican Party (United States), Republican Party, he served as the 45 ...
proposed USMCA during the G20 Summit the following month, where it was signed by him, Mexican president
Enrique Peña Nieto Enrique Peña Nieto (; born 20 July 1966), commonly referred to by his initials EPN, is a Mexican former politician and lawyer who was the 64th president of Mexico from 2012 to 2018. A member of the Institutional Revolutionary Party (PRI), he p ...
, and Canadian prime minister Justin Trudeau. A revised version reflecting additional consultations was signed on December 10, 2019, and ratified by all three countries, with Canada being the last to ratify on March 13, 2020. Following notification by all three governments that the provisions were ready for domestic implementation, the agreement came into effect on .CBC News, "Mexico joins Canada, notifies U.S. it's ready to implement new NAFTA" 2020/04/04
accessed 6 April 2020
USMCA is primarily a modernization of NAFTA, namely concerning intellectual property and digital trade, and borrows language from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Canada and Mexico are signatories. Key changes from its predecessor include increased environmental and working regulations; greater incentives for automobile production in the U.S. (with quotas for Canadian and Mexican automotive production); more access to Canada's dairy market; and an increased duty-free limit for Canadians who buy U.S. goods online.The full list of differences between USMCA and NAFTA is listed on the website of the United States Trade Representative (USTR): The USMCA contains a provision for review and adjustment in 2026. The 2025 United States trade war with Canada and Mexico began on February 1, 2025, when at the beginning of his second non-consecutive term, President Trump cited an "extraordinary threat posed by illegal aliens and drugs" and imposed an additional 25% tariff on imports from Canada and Mexico. One day before they were set to take effect, the tariffs were paused for 30 days (from February 4 to March 4), after Canada and Mexico agreed to increase national security measures at their respective borders with the US, and to allow for negotiations on economic agreements. Canada and Mexico accused the United States of violating the USMCA when 25% tariffs went into effect on March 4, 2025. On March 6, 2025, two days after the tariffs took effect, Trump announced that all USMCA compliant products would be exempt from the tariffs until April 2, 2025.


Background and nomenclature

The United States–Mexico–Canada Agreement is based substantially on the
North American Free Trade Agreement The North American Free Trade Agreement (, TLCAN; , ALÉNA), referred to colloquially in the Anglosphere as NAFTA, ( ) was an agreement signed by Canada, Mexico, and the United States that created a trilateral trade bloc in North America. The ...
(NAFTA), which came into effect on January 1, 1994. The present agreement was the result of more than a year of negotiations including possible
tariff A tariff or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...
s by the United States against Canada in addition to the possibility of separate bilateral deals instead. During the 2016 U.S. presidential election,
Donald Trump Donald John Trump (born June 14, 1946) is an American politician, media personality, and businessman who is the 47th president of the United States. A member of the Republican Party (United States), Republican Party, he served as the 45 ...
's campaign included the promise to renegotiate NAFTA or cancel it if renegotiations were to fail. Upon election, Trump proceeded to make a number of changes affecting trade relations with other countries withdrawing from the
Paris Agreement The Paris Agreement (also called the Paris Accords or Paris Climate Accords) is an international treaty on climate change that was signed in 2016. The treaty covers climate change mitigation, adaptation, and finance. The Paris Agreement was ...
, ceasing to be part of negotiations for the
Trans-Pacific Partnership The Trans-Pacific Partnership (TPP), or Trans-Pacific Partnership Agreement (TPPA), was a proposed trade agreement between 12 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietn ...
, and significantly increasing tariffs with China reinforcing that he was serious about seeking changes to NAFTA, while drawing wide criticism as well. One journal article noted that much of the debate surrounding the virtues and faults of the USMCA is similar to that surrounding all free trade agreements (FTAs); for instance, the nature of FTAs as public goods, potential infringements of national sovereignty, and the role of business, labor, environmental, and consumer interests in shaping the language of trade deals. The agreement is referred to differently by each signatory—in the United States, it is called the United States–Mexico–Canada Agreement (USMCA); in Canada, it is officially known as the Canada–United States–Mexico Agreement (CUSMA) in English and the (ACEUM) in French; and in Mexico, it is called (T-MEC). The agreement is sometimes referred to as "New NAFTA" about the previous trilateral agreement it is meant to supersede, the
North American Free Trade Agreement The North American Free Trade Agreement (, TLCAN; , ALÉNA), referred to colloquially in the Anglosphere as NAFTA, ( ) was an agreement signed by Canada, Mexico, and the United States that created a trilateral trade bloc in North America. The ...
(NAFTA).


Country comparison

† Including Guam, Puerto Rico, and the U.S. Virgin Islands.
‡ Including Puerto Rico.


Negotiations

The formal process to renegotiate NAFTA began on May 18, 2017, when U.S. Trade Representative Robert Lighthizer notified Congress of the U.S. intent to start talks within 90 days. Under Trade Promotion Authority statutes, the USTR released its key negotiating objectives on July 7, 2017. Negotiations officially commenced on August 16, 2017, with eight formal rounds of talks held until April 8, 2018. By May 2, 2018, no resolution had been reached. Lighthizer warned that talks would pause until 2019 if no deal was finalized by the end of May, citing concerns over Mexico’s incoming president, Andrés Manuel López Obrador, who opposed parts of the negotiated terms. Separately, U.S. House Speaker Paul Ryan set a May 17, 2018, deadline for Congressional action, but this was ignored. A U.S.-Mexico deal was finally reached on August 27, 2018, though Canada still had not agreed. With Mexico’s outgoing president, Enrique Peña Nieto, leaving office on December 1, 2018, and a mandatory 60-day review period required, the deadline to finalize the text was September 30. Negotiators worked intensely and completed the draft just before midnight on September 30, 2018. The USMCA text was published as finalized on October 1, 2018, with Lighthizer crediting Jared Kushner for salvaging the deal multiple times. The agreement was signed by all three countries’ leaders on November 30, 2018, during the G20 summit in Buenos Aires. The English, Spanish, and French versions were declared equally authentic. Ratification required passage of enabling legislation in each country. U.S. Ambassador to Canada Kelly Craft played a critical role in bridging U.S.-Canada differences, boosting her standing within the Trump administration. Behind the scenes, Blackstone CEO Stephen Schwarzman—retained by Trump—reportedly urged Canadian Prime Minister Justin Trudeau to compromise on dairy market protections during a January 2017 meeting with Canada’s Liberal Cabinet at a Calgary retreat, where civil servants were absent. Schwarzman claimed Trudeau feared a recession ahead of the 2019 Canadian election. On December 9, 2019, Fox News reported a breakthrough: negotiators agreed to enforce a $16/hour minimum wage for Mexican auto workers via a neutral third party. Mexico, which imports all its aluminum, opposed U.S. steel/aluminum content rules for vehicles but conceded to finalize ratification by year’s end.


Provisions

Provisions of the agreement cover a wide range, including agricultural produce, homelessness, manufactured products, labor conditions, and digital trade, among others. Some of the more prominent aspects of the agreement include giving U.S. dairy farmers greater access to the Canadian market, guidelines to have a higher proportion of automobiles manufactured among the three nations rather than imported from elsewhere, and retention of the dispute resolution system similar to that included in NAFTA.


Dairy

The dairy provisions give the U.S. tariff-free access to 3.6%, up from 3.25% under the never-ratified
Trans-Pacific Partnership The Trans-Pacific Partnership (TPP), or Trans-Pacific Partnership Agreement (TPPA), was a proposed trade agreement between 12 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietn ...
, of the $15.2 billion (as of 2016) Canadian dairy market. Canada agreed to eliminate Class 7 pricing provisions on certain dairy products, while Canada's domestic supply management system remains in place.


Automobiles

Automobile rules of origin (ROO) requirements mandate that a certain portion of an automobile's value must come from within the governed region. In NAFTA, the required portion was 62.5 percent. The USMCA increases this requirement to 75 percent of the automobile's value. The initial proposal from the Trump administration was to increase this to 85 percent and an added stipulation that 50 percent of the automotive content be made by U.S. carmakers, but in the end the deal's text did not include this version of the provision. There is concern that the increased domestic sourcing requirements, aimed at promoting U.S. employment, will cause higher input costs and disruptions to supply chains deriving outside of certain developing or once more industrious zones, for example the "Rust" Belt.


''De minimis''

To facilitate cross-border trade, Mexico and Canada agreed to raise their ''
de minimis ''De minimis'' is a legal doctrine by which a court refuses to consider trifling matters. The name of the doctrine is a Latin expression meaning "pertaining to minimal things" or "with trifles", normally in the terms ("The praetor does not conce ...
'' exemption thresholds for the application of taxes and customs duties. (In 2016, the United States raised its ''de minimis'' threshold for all countries to US$800 (from US$200) per person per day to save on enforcement costs.) For goods transported to Canada by courier from the United States or Mexico, Canada increased the threshold from C$20 (approximately US$16) to C$40 for taxes ( GST, HST, PST), and to C$150 for customs duties (
tariffs A tariff or import tax is a duty imposed by a national government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods or raw materials and is ...
). Some goods do not have an exemption, such as alcohol and tobacco. Mexico maintained its ''de minimis'' threshold at US$50 for taxes, and it agreed to provide duty-free shipments up to the equivalent of US$117.


Labor

USMCA Annex 23-A requires Mexico to pass legislation that improves the collective bargaining capabilities of labor unions. The specific standards Mexico is required to comply with are detailed in the
International Labour Organization The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice by setting international labour standards. Founded in October 1919 under the League of Nations, it is one of the firs ...
's Convention 98 on freedom of association and collective bargaining. The administration of Mexico's president,
Andrés Manuel López Obrador Andrés Manuel López Obrador (; born 13 November 1953), also known by his initials AMLO, is a Mexican former politician, political scientist, public administrator and writer who served as the 65th president of Mexico from 2018 to 2024. He se ...
, introduced legislation in late 2018 that pursues compliance with these international standards. Other labor-related measures include a minimum wage requirement in the automotive industry. Specifically, 40 to 45 percent of the automobiles manufactured in North America must be made in a factory that pays a minimum of US$16 per hour. This measure will be phased in during the first five years after USMCA ratification.


Intellectual property

The USMCA extends the copyright length in Canada to life plus 70 years, and 75 years for sound recordings. Furthermore, biotechnological firms would have at least 10 years exclusivity period for
agricultural chemicals An agrochemical or agrichemical, a contraction of ''agricultural chemical'', is a chemical product used in industrial agriculture. Agrichemical typically refers to biocides (pesticides including insecticides, herbicides, fungicides and nematicid ...
(double the current 5), and industrial designs' period would "jump" from current 10 to 15 years. Compared to NAFTA, USMCA would require criminal penalties and civil remedies to be available for both satellite and cable theft, reaffirm the
Doha Declaration on the TRIPS agreement and public health The Doha Declaration on the TRIPS Agreement and Public Health was adopted by the WTO Ministerial Conference of 2001 in Doha on November 14, 2001. It reaffirmed flexibility of TRIPS (trade-related aspects of intellectual property rights) member stat ...
, contain the strongest due process and transparency requirements for geographic indicator protection systems in any FTA, require criminal procedures and penalties for recording copyrighted movies in movie theaters, and require ''
ex officio An ''ex officio'' member is a member of a body (notably a board, committee, or council) who is part of it by virtue of holding another office. The term '' ex officio'' is Latin, meaning literally 'from the office', and the sense intended is 'by r ...
'' authority for customs officials to stop suspected counterfeit goods.


Pharmaceuticals

USMCA provides for a patent term extension where there is an "unreasonable curtailment" of a pharmaceutical's patent term stemming from delays in the regulatory or marketing approval process. USMCA accounts for data exclusivity of new pharmaceutical products. New pharmaceutical products are those that do not contain a chemical entity that has been previously approved by that party. Generic manufacturers are prohibited from relying on the innovator's previously undisclosed safety/efficacy testing for at least five years from the date marketing approval was first granted. Mexico agreed to extend its data protection of new pharmaceutical products. Canada's data protection regime already offered an eight-year exclusivity period for innovative drugs and thus was not required to make changes. Initially, the parties contemplated creating an exclusivity period for new products containing biologics for at least ten years from the approval date. Biologics are defined as a product that is "produced using biotechnology processes and that is, or contains, a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product, for use in human beings for the prevention, treatment, or cure of a disease or condition". This period would have been longer than the exclusivity periods of both Canada and Mexico, but shorter than that of the United States. This provision was heavily criticized for its potential to limit access to biological medications and make them unaffordable. Thus, biologics were covered in the definition of "new pharmaceutical products" and are instead eligible for a minimum five-year protection period.


Elimination of foreign office and local presence requirements

The USMCA sunset clause would eliminate the need for companies to establish headquarters in any other USMCA country. It will encourage cross-border business by excluding U.S. companies from the need to localize data and open a Canadian or Mexican HQ. For example, McDonald's Canada or Apple Canada could both cease to exist and the surviving entities would be a North American McDonald's or Apple.


Dispute settlement mechanisms

There are three primary dispute settlement mechanisms contained in NAFTA. Chapter 20 is the country-to-country resolution mechanism. It is often regarded as the least contentious of the three mechanisms, and it was sustained in its original NAFTA form in USMCA. Such cases would involve complaints between USMCA member states that a term of the agreement had been violated. Chapter 19 disputes manage the justifications of anti- dumping or countervailing duties. Without Chapter 19, the legal recourse for managing these policies would be through the domestic legal system. Chapter 19 specifies that a USMCA Panel will hear the case and act as an International Trade Court in arbitrating the dispute. The Trump administration attempted to remove Chapter 19 from the new USMCA text, though it has thus far endured in the agreement. Chapter 11 is the third mechanism, known as investor-state dispute settlement, wherein multinational corporations are enabled to sue participating governments over allegedly discriminatory policies. Chapter 11 is broadly considered the most controversial of the settlement mechanisms. The Canadian negotiators effectively removed themselves from Chapter 11 in the USMCA version of this measure, Chapter 14. Canada will have a full exemption from ISDS three years after NAFTA has been terminated.


Beyond the Border accord

In addition to building on the existing NAFTA fused with elements from the
Trans-Pacific Partnership The Trans-Pacific Partnership (TPP), or Trans-Pacific Partnership Agreement (TPPA), was a proposed trade agreement between 12 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietn ...
, the USMCA also incorporates elements from the "Beyond the Border" accord signed by former Prime Minister Stephen Harper and former president Barack Obama, most notably the "single window" initiative and folding the "Regulatory Cooperation Council" into the "Good Regulatory Governance" chapter 28 of the new accord.


Sunset clause

Additionally, there is a stipulation that the agreement itself must be reviewed by the three nations every six years, with a 16-year
sunset clause In public policy, a sunset provision or sunset clause is a measure within a statute, regulation, or other law that provides for the law to cease to be effective after a specified date, unless further legislative action is taken to extend it. Unli ...
. The agreement can be extended for additional 16-year terms during the six-year reviews. The introduction of the sunset clause places more control in shaping the future of the USMCA in the hands of domestic governments. However, there is concern that this can create greater uncertainty. Sectors such as automotive manufacturing require significant investment in cross-border supply chains. Given the dominance of the United States consumer market, this will likely pressure firms to locate more production in the US, with a greater likelihood of increased production costs for those vehicles. Local production has always been tied to increased demand for local skill-based acquisition which is another form of human-rights particularly with laterally transferable skills and specific categories of educational attainment. Local skill demand and supply serves to enfranchise working populations in their abilities to sustain locally interdependent markets, adding to an ability of skilled individuals to respond to stressors while generally altering other areas of demand/supply in the
market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market *Marketing, the act of sat ...
materially and in a community. Wider phenomena that are associated with skill-based
labor Labour or labor may refer to: * Childbirth, the delivery of a baby * Labour (human activity), or work ** Manual labour, physical work ** Wage labour, a socioeconomic relationship between a worker and an employer ** Organized labour and the labour ...
enfranchisement include benefits socioeconomically to that of domestic relationships and children, public safety and crime reported or not, and resilience, and hopefully, within any ''extant skill-deprived'' regions.


Currency

A new addition to the USMCA is the inclusion of Chapter 33 which covers Macroeconomic Policies and Exchange Rate Matters. This is considered significant because it could set a precedent for future trade agreements. Chapter 33 establishes requirements for currency and macroeconomic transparency which, if violated, would constitute grounds for a Chapter 20 dispute appeal. The US, Canada, and Mexico are all currently in compliance with these transparency requirements in addition to the substantive policy requirements which align with the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
Articles of Agreement.


Article 32.10

The USMCA will affect how member countries negotiate future free trade deals. Article 32.10 requires USMCA countries to notify USMCA members three months in advance if they intend to begin free trade negotiations with non-market economies. Article 32.10 permits USMCA countries the ability to review any new free trade deals members agree to go forward. Article 32.10 is widely speculated to be targeting China in intent. In fact, a senior White House official said in connection to the USMCA deal that "We have been very concerned about the efforts of China to essentially undermine the U.S. position by entering into arrangements with others."


Against exchange rate manipulation

The USMCA countries are to abide by
IMF The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of la ...
standards aimed to prevent the manipulation of exchange rates. The agreement calls for public disclosure of market interventions. The IMF can be summoned to act as a referee if the parties dispute.


Against state-owned enterprises

State-owned enterprises, which are favored by China as levers for exercising its dominance, are prevented from receiving unfair subsidies when compared to private enterprises.


Against import and export restrictions

None of the parties are permitted to implement restrictions/prohibitions of imports and exports other than those specified in the
General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its p ...
(GATT 1994) or specified within USMCA. GATT 1994 specifies cases such as shortages, failure to meet local regulatory or licencing standards, and certain Animal Agricultural considerations. This condition does not apply to any party outside of the three USMCA parties. A party is able to call the parties to review a restriction or prohibition imposed by another party on a non-party if the restriction or prohibition causes pricing or other types of distortions for any of the parties.


Canadian Exemptions from USMCA Import and Export Restrictions

* Logs * Unprocessed fish * Goods produced by forced or slave labour * Firearms deemed illegal by the Canadian Government * Literature and other material that constitute terrorist propaganda, depict violence or crime, child pornography, and other material not legal in Canada * Commercial marine activity in Canadian waters * Volumes of
ethyl alcohol Ethanol (also called ethyl alcohol, grain alcohol, drinking alcohol, or simply alcohol) is an organic compound with the chemical formula . It is an alcohol, with its formula also written as , or EtOH, where Et is the pseudoelement symbol ...


Mexican Exemptions from USMCA Import and Export Restrictions

* Certain hydrocarbon and petroleum based products * Used vehicles and used vehicle components * Used clothing


United States Exemptions from USMCA Import and Export Restrictions

* Logs


Ratification and legal status

The USMCA was signed on November 30, 2018, by all three parties at the G20 summit in Buenos Aires, as had been planned in the preceding months. However, continued disputes over labor rights, steel, and aluminium prevented ratification of this version of the agreement. Consequently, Canadian Deputy Prime Minister Chrystia Freeland, U.S. Trade Representative Robert Lightizer and Mexican Undersecretary for North America Jesus Seade formally signed a revised agreement on December 10, 2019, which was ratified by all three countries by March 13, 2020.


United States

Domestic procedures for ratification of the agreement are governed by the Trade promotion authority legislation, otherwise known as "fast track" authority. Growing objections within the member states about U.S. trade policy and various aspects of the USMCA affected the signing and ratification process. Mexico stated they would not sign the USMCA if steel and aluminium tariffs remained. There was speculation after the results of the November 6, 2018 U.S. midterm elections that the Democrats' increased power in the House of Representatives might interfere with the passage of the USMCA agreement. Senior Democrat Bill Pascrell argued for changes to the USMCA to enable it to pass Congress. Republicans opposed USMCA provisions requiring labor rights for LGBTQ and pregnant workers. Forty Congressional Republicans urged Trump against signing a deal that contained "the unprecedented inclusion of sexual orientation and gender identity language"; as a result, Trump ultimately signed a revised version that committed each nation only to "policies that it considers appropriate to protect workers against employment discrimination" and clarified that the United States would not be required to introduce any additional nondiscrimination laws. The Canadian government expressed concern about the changes evolving within the USMCA agreement. On December 2, 2018, Trump announced he would begin the six-month process to withdraw from NAFTA, adding that Congress needed either to ratify the USMCA or else revert to pre-NAFTA trading rules. Academics had debated whether the president can unilaterally withdraw from the pact without Congressional approval. On March 1, 2019, organizations representing the U.S. agricultural sector announced their support for the USMCA and urged Congress to ratify the agreement. They also urged the Trump administration to continue upholding NAFTA until the new trade agreement is ratified. However, on March 4, House Ways and Means chairman
Richard Neal Richard Edmund Neal (born February 14, 1949) is an American politician serving as the United States House of Representatives, U.S. representative for since 1989. The district, numbered as the Massachusetts's 2nd congressional district, 2nd di ...
predicted a "very hard" path through Congress for the deal. Starting March 7, senior White House officials met with House Ways and Means members, as well as moderate caucuses from both parties, such as the Problem Solvers Caucus, the Tuesday Group, and the
Blue Dog Coalition The Blue Dog Coalition, commonly known as the Blue Dogs or Blue Dog Democrats, is a Congressional caucus, caucus of Political moderate, moderate members from the Democratic Party (United States), Democratic Party in the United States House of ...
in their efforts to gain support for ratification. The Trump administration has also backed down from the threat of withdrawing from NAFTA as the negotiations with Congress continued. On May 30, 2019, USTR Lighthizer submitted to Congress a draft statement on administrative measures concerning the implementation of the U.S.-Mexico-Canada Agreement (USMCA and the new NAFTA) by the Presidential Trade Promotion Authority (TPA) Act 2015 (Statement of Administrative Action). The draft would allow USMCA implementation legislation to be submitted to Congress after 30 days, thus on or after June 29. In a letter sent to Nancy Pelosi, Speaker of the House of Representatives, and Kevin McCarthy, House Minority Leader, Lighthizer said that the USMCA is the gold standard in U.S. trade policy, modernizing U.S. competitive digital trade, intellectual property, and services provisions and creating a level playing field for U.S. companies, workers and farmers, an agreement that represents a fundamental rebalancing of trade relations between Mexico and Canada. With the draft statement on administrative measures submitted, Speaker Pelosi stated that U.S. Trade Representative Lighthizer should confirm that the draft wording of the USMCA would benefit U.S. workers and farmers and that although she agreed on the need to revise NAFTA, stricter enforcement of labor and environmental protection standards was needed. President Donald Trump warned on September 25, 2019, that an impeachment inquiry against him could derail congressional approval of USMCA, dragging down Mexico's peso and stock market as investors fled riskier assets. The U.S. House of Representatives was proceeding with work on USMCA, U.S. House Speaker Nancy Pelosi said on September 26, 2019. ''Bloomberg News'' reported on October 29, 2019, that the Trump administration planned to include in the legislation approving the pact a provision that would allow the USTR to directly control how and where cars and parts are made by global automakers. On December 19, 2019, the
United States House of Representatives The United States House of Representatives is a chamber of the Bicameralism, bicameral United States Congress; it is the lower house, with the U.S. Senate being the upper house. Together, the House and Senate have the authority under Artic ...
passed the USMCA with bipartisan support by a vote of 385 (Democratic 193, Republican 192) to 41 (Democratic 38, Republican 2, Independent 1). On January 16, 2020, the
United States Senate The United States Senate is a chamber of the Bicameralism, bicameral United States Congress; it is the upper house, with the United States House of Representatives, U.S. House of Representatives being the lower house. Together, the Senate and ...
passed the trade agreement by a vote of 89 (Democratic 38, Republican 51) to 10 (Democratic 8, Republican 1, Independent 1) and the bill was forwarded to the White House for Trump's signature. On January 29, 2020, Trump signed the agreement into law (Public Law No: 116–113). It officially amended NAFTA but not the 1989
Canada–United States Free Trade Agreement The Canada–United States Free Trade Agreement (CUSFTA), official name as the Free Trade Agreement between Canada and the United States of America (), was a bilateral trade agreement reached by negotiators for Canada and the United States on ...
which is only "suspended", so in case parties fail to extend or renew it in 6 years, FTA would become the law. On April 24, 2020, Lighthizer gave official notice to Congress that the new trade deal was set to come into force on July 1, 2020, and notified Canada and Mexico to that effect. On June 1, 2020, the USTR released the "Uniform Regulations", which help interpret the different chapters of the USMCA, primarily chapters 4–7, paving the way for the Agreement to take effect domestically; NAFTA was consequently replaced the following month, on July 1, 2020.


Mexico

On November 27, 2018, the government of Mexico said it would give to Jared Kushner its highest civilian honor, the
Order of the Aztec Eagle The Mexican Order of the Aztec Eagle () forms part of the Mexican Honors System and is the highest Mexican order awarded to foreigners. History It was created by decree on December 29, 1933, by President Abelardo L. Rodríguez as a reward to ...
, for his work in negotiating the USMCA. On June 19, 2019, the
Senate of Mexico The Senate of the Republic (), constitutionally the Chamber of Senators of the Honorable Congress of the Union (), is the upper house of Mexico's bicameral Congress. It currently consists of 128 members, who serve six-year terms. History A b ...
passed the treaty's ratification bill on first reading in a 114–4 vote, with three abstentions. The treaty was passed on its second and final reading by the Senate on December 12, 2019, by a vote of 107–1. On April 3, 2020, Mexico announced it was ready to implement the agreement, joining Canada, though it requested that its automotive industry be given extra time to comply. Manufacturing in Mexico, as of 2018, accounts for 17% of its GDP. However,
Andrés Manuel López Obrador Andrés Manuel López Obrador (; born 13 November 1953), also known by his initials AMLO, is a Mexican former politician, political scientist, public administrator and writer who served as the 65th president of Mexico from 2018 to 2024. He se ...
, then president of Mexico, believed that this trade deal would be a net positive for the Mexican economy by growing foreign investments, creating jobs, and expanding trade.


Canada

On May 29, 2019, prime minister Justin Trudeau introduced a CUSMA implementation billAn Act to implement the Agreement between Canada, the United States of America and the United Mexican States in the
House of Commons The House of Commons is the name for the elected lower house of the Bicameralism, bicameral parliaments of the United Kingdom and Canada. In both of these countries, the Commons holds much more legislative power than the nominally upper house of ...
. On June 20, it passed second reading in the House of Commons and was referred to the Standing Committee on International Trade. Governor General of Canada
Julie Payette Julie Payette (; born October 20, 1963) is a Canadian engineer, scientist and former astronaut who served from 2017 to 2021 as Governor General of Canada, the List of governors general of Canada, 29th since Canadian Confederation. Payette holds ...
declared the dissolution of the
42nd Canadian Parliament The 42nd Canadian Parliament was in session from December 3, 2015, to September 11, 2019, with the membership of its lower chamber, the House of Commons of Canada, having been determined by the results of the 2015 federal election held on Octob ...
on September 11, 2019, and formally issued the writs of election for the
2019 Canadian federal election The 2019 Canadian federal election was held on October 21, 2019. Members of the House of Commons were elected to the 43rd Canadian Parliament. In keeping with the maximum four-year term under a 2007 amendment to the ''Canada Elections Act'', ...
. All pending legislation is scrapped upon any dissolution of Parliament, meaning that the CUSMA implementation bill needed to be re-introduced in the 43rd Canadian Parliament which began on December 5, 2019. On December 10, 2019, a revised CUSMA agreement was reached by the three countries. On January 29, 2020, Deputy Prime Minister and Minister of Intergovernmental Affairs Chrystia Freeland introduced CUSMA implementation bill C-4 in the
House of Commons The House of Commons is the name for the elected lower house of the Bicameralism, bicameral parliaments of the United Kingdom and Canada. In both of these countries, the Commons holds much more legislative power than the nominally upper house of ...
and it passed its first reading without a recorded vote. On February 6, the bill passed second reading in the House of Commons on a vote of 275 to 28, with the
Bloc Québécois The Bloc Québécois (, , BQ) is a centre-left politics, centre-left and list of federal political parties in Canada, federal political party in Canada devoted to Quebec nationalism, Quebecois nationalism, social democracy, and the promotion o ...
voting against and all other parties voting in favor, and it was referred to the Standing Committee on International Trade. On February 27, 2020, the committee voted to send the bill to the full House for third reading, without amendments. On March 13, 2020, the House of Commons passed bill C-4 to implement CUSMA before suspending itself for 6 weeks due to the
COVID-19 pandemic The COVID-19 pandemic (also known as the coronavirus pandemic and COVID pandemic), caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), began with an disease outbreak, outbreak of COVID-19 in Wuhan, China, in December ...
. Due to the "extraordinary circumstances", the third and final reading of the bill was deemed to be approved without a recorded vote, as part of an omnibus adjournment motion unanimously approved by all members present. Prime Minister Justin Trudeau was not present, since he was in self-isolation at home after his wife Sophie Grégoire Trudeau tested positive for
COVID-19 Coronavirus disease 2019 (COVID-19) is a contagious disease caused by the coronavirus SARS-CoV-2. In January 2020, the disease spread worldwide, resulting in the COVID-19 pandemic. The symptoms of COVID‑19 can vary but often include fever ...
infection. On the same day, the Senate passed first, second, and third readings of the bill without recorded votes, and Governor General Julie Payette granted
royal assent Royal assent is the method by which a monarch formally approves an act of the legislature, either directly or through an official acting on the monarch's behalf. In some jurisdictions, royal assent is equivalent to promulgation, while in othe ...
and it became law, thus completing Canada's ratification of the legislation. On April 3, 2020, Canada notified the United States and Mexico that it completed its domestic ratification process of the agreement.


Effects and analysis


Similarities to NAFTA

During his 2016 election campaign and presidency, Trump was highly critical of NAFTA (oftentimes describing it as "perhaps the worst trade deal ever made") while extolling USMCA as "a terrific deal for all of us". The USMCA is very similar to NAFTA, carrying over many of the same provisions and making only modest, mostly cosmetic changes,Geoffrey Gertz
5 things to know about USMCA, the new NAFTA
, Brookings Institution (October 2, 2018).
and is expected to have only a minor economic effect.Tory Newmyer
The Finance 202: USMCA isn't expected to have a big impact on the economy
, ''Washington Post'' (December 11, 2019).
Former U.S. Trade Representative
Mickey Kantor Michael Kantor (born August 7, 1939) is an American attorney who served as the United States Trade Representative from 1993 to 1996 and United States Secretary of Commerce in 1996 and 1997. Early life and education Born and raised in Nashville, ...
, who oversaw the signing of NAFTA during the Bill Clinton administration, said, "It's the original NAFTA."


Response

Representatives from the American Federation of Labor and Congress of Industrial Organizations (AFL–CIO) have criticized the labor standards in the USMCA as unenforceable and toothless. Senator
Elizabeth Warren Elizabeth Ann Warren (née Herring; born June 22, 1949) is an American politician and former law professor who is the Seniority in the United States Senate, senior United States senator from the state of Massachusetts, serving since 2013. A mem ...
of Massachusetts said "the new rules will make it harder to bring down drug prices for seniors and anyone else who needs access to life-saving medicine", reflecting on the measure that expands the patent length for biological substances to 10 years, limiting access for new generic drugs to enter the market. In a 2018 fact sheet, the Trump administration's Office of the U.S. Trade Representative cited new digital trade measures, the strengthening of protection for trade secrets, and the automobile rules-of-origin adjustments, as some of the benefits of the proposed trade agreement. In 2018 Jim Balsillie, former chair of once-dominant handheld telephone firm
Research in Motion BlackBerry Limited, formerly Research In Motion (RIM), is a Canadian software company specializing in secure communications and the Internet of Things (IoT). Founded in 1984, it developed the BlackBerry brand of interactive pagers, smartpho ...
, wrote that the "colonial supplicant attitude" of Canadian politicians was a wrong-headed approach to the data and IP provisions of the USMCA. A report published in the summer of 2018 was that the
National Research Council of Canada The National Research Council Canada (NRC; ) is the primary national agency of the Government of Canada dedicated to science and technology research and development. It is the largest federal research and development organization in Canada. Th ...
feared that domestic firms run the risk of becoming "data cows" of foreign
big data Big data primarily refers to data sets that are too large or complex to be dealt with by traditional data processing, data-processing application software, software. Data with many entries (rows) offer greater statistical power, while data with ...
under the provisions of the USMCA. On January 30, 2020, Trump said: "The USMCA is the fairest, most balanced, and beneficial trade agreement we have ever signed into law. It’s the best agreement we’ve ever made". By contrast, on February 24, 2025, during Trump's second term, he said that Mexico and Canada "made these great deals with the United States, took advantage of the United States on manufacturing ... I look at some of these agreements, I'd read them at night, and I'd say, 'Who would ever sign a thing like this?'"


Economic effects

USMCA is projected to have a very small effect on the economy. An
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
(IMF) working paper issued in late March 2019 found that the agreement would have "negligible" effects on the broad economy.Mary E. Burfisher, Frederic Lambert & Troy D Matheson
NAFTA to USMCA: What is Gained?
, International Monetary Fund Working Paper No. 19/73 (March 26, 2019).
The IMF study projected that the USMCA "would adversely affect trade in the automotive, textiles and apparel sectors, while generating modest aggregate gains in terms of welfare, mostly driven by improved goods market access, with a negligible effect on real GDP." The IMF study noted that the USMCA's economic benefits would be greatly enhanced if there were a repeal of the tariffs enacted by President Trump (i.e., if the U.S. eliminated tariffs on steel and aluminium imports from Canada and Mexico, and Canada and Mexico dropped retaliatory tariffs on imports from the U.S.) An April 2019
International Trade Commission The United States International Trade Commission (USITC or I.T.C.) is an agency of the United States federal government that advises the legislative and executive branches on matters of trade. It was created by Congress in 1916 as the U.S. Tari ...
analysis on the likely effect of the USMCA estimated that the agreement, when fully implemented (six years following ratification) would increase U.S. real GDP by 0.35% and would increase U.S. total employment by 0.12% (176,000 jobs).
United States-Mexico-Canada Agreement: Likely Impact on the U.S. Economy and Specific Industry Sectors
' (with errata), United States International Trade Commission, Publication No. 4889, Investigation No. TPA 105-003 (April 2019).
The analysis cited by another study from the
Congressional Research Service The Congressional Research Service (CRS) is a public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a ...
found the agreement would not have a measurable effect on jobs, wages, or overall economic growth. In the summer of 2019, Trump's top economic advisor Larry Kudlow (the director of the National Economic Council in the Trump White House) made unsupported claims regarding the likely economic benefits of the agreement, overstating projections related to jobs and GDP growth. In December 2019, Thea M. Lee and Robert E. Scott of the
Economic Policy Institute The Economic Policy Institute (EPI) is a 501(c)(3) organization, 501(c)(3) non-profit think tank based in Washington, D.C., that carries out economic research and analyzes the economic impact of policies and proposals. Affiliated with the Labor un ...
criticized USMCA as "weak tea, at best" because it would have "virtually no measurable impacts on wages or incomes for U.S. workers," noting that "The benefits are tiny, and it's highly uncertain whether the deal will be a net winner or loser, in the end." In June 2020, the
Nikkei Asian Review ''Nikkei Asia'', known as ''Nikkei Asian Review'' between 2013 and 2020, is a major Japan-based English-language weekly news magazine focused on the Asian continent, although it also covers broader international developments. It is headquartere ...
reported that Japanese auto companies are opting to "triple Mexican pay rather than move to the US" to avoid tariffs on automotive parts.


See also

* North American integration * Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) *
North American Free Trade Agreement The North American Free Trade Agreement (, TLCAN; , ALÉNA), referred to colloquially in the Anglosphere as NAFTA, ( ) was an agreement signed by Canada, Mexico, and the United States that created a trilateral trade bloc in North America. The ...
(NAFTA) *
North American Leaders' Summit The North American Leaders' Summit (NALS), called the Three Amigos Summit in the English language popular press, Cumbre de Los Tres Amigos in Spanish and Sommet des trois amigos in French, is the trilateral summit between the prime minister of ...
(NALS) *
Trans-Pacific Partnership The Trans-Pacific Partnership (TPP), or Trans-Pacific Partnership Agreement (TPPA), was a proposed trade agreement between 12 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietn ...
(TPP) * U.S. public opinion on the North American Free Trade Agreement *
China–United States trade war An economic conflict between China and the United States has been ongoing since January 2018, when U.S. president Donald Trump began Tariffs in the first Trump administration, imposing tariffs and other trade barriers on China with the aim of fo ...


Notes


References


Further reading

* Beaulieu, Eugene, and Dylan Klemen. "You Say USMCA or T-MEC and I Say CUSMA: The New NAFTA-Let's Call the Whole Thing On." ''The School of Public Policy Publications'' (2020
online


External links


Agreement Text
from the Office of the US Trade Representative
US implementation act
as amended
PDFdetails
in the GPObr>Statute Compilations collection
{{DEFAULTSORT:United States-Mexico-Canada Agreement 2018 establishments in North America 2018 in American politics 2018 in Canadian politics 2018 in Mexican politics 2019 in American politics 2019 in Canadian politics 2019 in Mexican politics 2020 in American politics 2020 in Canadian politics 2020 in Mexican politics Economy of North America History of Canada (1992–present) First presidency of Donald Trump Premiership of Justin Trudeau Chrystia Freeland Canada–Mexico–United States trade relations Free trade agreements of Canada Free trade agreements of Mexico Free trade agreements of the United States Treaties concluded in 2018 Trade blocs Territorial entities in North America Canada–United States trade relations Free-trade areas International organizations based in the Americas Jared Kushner