USTR Targets 2026 for USMCA Breakup; Eyes Separate Bilateral Deals for Canada and Mexico

HEADLINE: USTR Targets 2026 for USMCA Breakup; Eyes Separate Bilateral Deals for Canada and Mexico

WASHINGTON — The Trump administration is actively exploring the dissolution of the trilateral USMCA framework in favor of separate, bilateral free trade agreements with Canada and Mexico. U.S. Trade Representative Jamieson Greer confirmed that the administration views the pact's mandatory 2026 review as a strategic off-ramp to decouple the North American trading bloc.

Greer acknowledged recent high-level discussions with President Trump regarding the termination of the trilateral pact. The USTR indicated that if the current terms prove "unfavorable" during the upcoming review, the U.S. is prepared to pursue a "divide and leverage" strategy—negotiating distinct terms with Ottawa and Mexico City to maximize U.S. bargaining power.

The 2026 Pivot Point

This strategic pivot fundamentally alters the legislative timeline for North American trade. While the USMCA is technically authorized through 2036, the agreement’s "Sunset Clause" mandates a "Joint Review" six years after entry into force. That review date is fixed for July 1, 2026.

Greer’s comments suggest the administration will utilize this milestone not to extend the agreement, but to trigger its dismantling. For market observers, this timeline effectively precludes the ratification of any new bilateral trade laws in 2025. With the formal review process anchoring negotiations to mid-2026, any replacement statute—whether a treaty or a Congressional-Executive Agreement—would unlikely clear Congress before late 2026 or early 2027.

Procedural and Political Friction

The administration has already initiated the preliminary phase of this transition. As of December 1, 2025, the USTR announced public hearings to gather input for the review. However, the shift from a unified treaty to two distinct bilateral deals faces significant headwinds.

Domestic opposition is mounting. On December 1, a coalition of over 500 business groups petitioned Ambassador Greer to "preserve and strengthen" the current unified framework, arguing that fracturing the North American market would undercut regional competitiveness. This corporate resistance suggests that even if the administration pursues a breakup in 2026, the legislative path to ratifying two new deals will be slow and contentious.

Strategic Decoupling

The push for bilateralism is driven by a desire to isolate specific geopolitical grievances. By separating the partners, the U.S. aims to close the "backdoor" entry of Chinese goods—a primary concern cited during Greer’s confirmation—via distinct enforcement mechanisms for each neighbor. Furthermore, bilateral leverage allows the U.S. to apply targeted pressure on non-trade issues, including the labor disputes in Mexico targeted by the USTR throughout 2025, and the fentanyl and migration concerns that prompted tariff actions earlier this year.

While the trilateral pact remains in force today, the USTR’s admission establishes a clear intent: the Trump administration is positioning the July 2026 review as a de facto termination date for the current North American order.