The future of the U.S.-Mexico-Canada Agreement (USMCA) entered a new phase earlier this month after the Trump administration declined to automatically renew the trade pact for another 16-year term. Instead, U.S. Trade Representative Jamieson Greer says the agreement will move into rolling annual reviews through its scheduled expiration in 2036, a move the administration says was needed rather than simply extending the current deal.
In a recent interview with Fox Business, Greer said “President Trump was never going to rubber stamp this,” arguing the administration wants to use the review process to address unresolved issues in the agreement before agreeing to another 16-year extension
He emphasized that there was bipartisan consensus that the deal had shortcomings and required fixes rather than an extension.
For agriculture, the announcement raises new questions about long-term certainty, future investment and whether lingering trade disputes, especially dairy, can finally be resolved. But one policy expert says it’s important to remember USMCA is much bigger than dairy and there are other segments that need to be addressed.
Tyler McCann, managing director of the Canadian Agri-Food Policy Institute, says while the decision wasn’t unexpected, it creates an environment that makes planning more difficult for farmers and agribusinesses across North America.
“We’re in an era of uncertainty,” McCann tells U.S. Farm Report. “As much as the U.S. has been clear that this was coming, it’s not good for any of us to live in this time of increased volatility in North America. We need to be looking at a longer time horizon for the investments that we need, and this just doesn’t work in any of our favor.”
McCann says he still expects the agreement will ultimately be renewed, but the annual review process injects uncertainty that could slow investment decisions in agriculture, food processing and other sectors that depend on stable North American trade.
Dairy Still Tops the List of Trade Friction
Dairy has remained one of the most contentious agricultural issues between the U.S. and Canada since USMCA was negotiated. U.S. dairy organizations have long argued that Canada has not fully delivered on the market access commitments it made under the agreement, while Canada maintains it has followed the negotiated rules. The disagreement has already resulted in two formal dispute settlement cases under USMCA.
McCann says those rulings produced mixed interpretations. While both countries claimed success following the first dispute panel, he notes the second panel ultimately determined Canada was complying with its obligations under the agreement. Even so, he says the legal outcome doesn’t necessarily resolve the broader political concerns surrounding dairy access.
“The reality is what the U.S. is asking for is not more access. They’re asking for better terms for the existing access that they have,” McCann explains.
A Rare Opportunity for a Win-Win
Despite years of political debate surrounding dairy, McCann believes this may actually be one of the easier trade issues to resolve during future negotiations. He says much of the public discussion has focused on expanding Canadian market access, but in reality, the U.S. is largely seeking improvements in how the existing tariff-rate quotas are administered rather than asking Canada to open additional portions of its dairy market.
“I think it’s easy to make this a relative win-win. I think we’ve almost overblown dairy,” he says. “And I think because the U.S. Is being very clear that it doesn’t want more dairy access, it just wants better access within the amounts that are already agreed to, that it is easy to make this a relative win-win.”
According to McCann, adjusting the administration of existing dairy quotas could address many U.S. concerns while allowing Canada to maintain its supply management system. He argues both countries would benefit from finding common ground because the broader agreement has been overwhelmingly positive for agriculture across North America, and that there are more challenging issues outside of dairy that will be addressed.
“When we look at some of the other issues that are there, or some of the issues that the U of S has with Mexico, some of issues outside of agriculture, the issues are a lot more challenging... We are all much stronger because of the USMCA agreement, and renewing it is good for Canada, but it’s also good for the US. It’s also for Mexico, too,” says McCann.
Trade Talks Extend Well Beyond Agriculture
While dairy often dominates headlines, McCann says negotiators will have a much broader list of issues to work through during the review process. Several of those involve manufacturing and industrial policy rather than agriculture, including automotive rules of origin that determine how much North American content must be included in vehicles to qualify for preferential tariff treatment.
“There are things like rules of origin for autos,” McCann says. “The U.S. government wants to make sure more cars sold in the U.S. are made more in the United States.”
He also points to Canadian taxes that the U.S. would like addressed, along with provincial restrictions on U.S. alcohol that emerged during recent trade disputes. McCann says resolving those issues could ultimately benefit Canadian consumers while helping improve the broader trade relationship between the two countries.
Investment Could Be the Biggest Casualty
For agriculture, McCann believes the greatest risk isn’t necessarily higher tariffs or the loss of USMCA itself. Instead, he says uncertainty surrounding annual reviews could discourage the long-term investments needed to expand food processing capacity, fertilizer production and other agricultural infrastructure.
“We have really benefited and relied on that reliable market access to the United States,. Seeing that certainty go away puts a lot of that at risk,” he adds.
He points to fertilizer manufacturing as one example where companies need confidence that North American markets will remain integrated before investing billions of dollars in new production facilities. If trade policy becomes less predictable, those investments may simply happen elsewhere or be delayed altogether.
Could Bilateral Deals Replace the Trilateral Agreement?
The Trump administration has also suggested bilateral agreements with Canada and Mexico could play a larger role moving forward. McCann says bilateral negotiations aren’t necessarily problematic if they’re narrowly focused on resolving specific disputes that fall outside the core agreement.
“If this is a targeted bilateral agreement that addresses some of the small irritants that are left outside of USMCA, that has the potential to be a good thing,” he says.
However, he cautions against allowing bilateral agreements to weaken the integrated North American market that agriculture has spent decades building. Livestock, feed, grain and food products routinely cross borders multiple times before reaching consumers, making a coordinated three-country framework especially valuable.
“We’ve got products that move, animals that move, crops that move back and forth across borders. It can’t come at the cost of that core trilateral agreement that really does work for all three partners,” McCann warns.
Farmers Still See Common Ground
While political tensions between Washington and Ottawa remain elevated, McCann says the agricultural relationship itself tells a different story. Producer groups on both sides of the border have consistently supported maintaining USMCA because of the economic benefits it has delivered to farmers, ranchers and food companies throughout North America.
“I think the relationship between Canadian farmers and U.S. farmers, and between Canadian agriculture and U.S. agriculture, is really strong,” McCann says. “We’ve seen a united front from partners on both sides of the border saying that this deal needs to happen.”
McCann says achieving a balance with the upcoming round of negogitations will require both governments to focus on practical solutions instead of allowing smaller disputes to overshadow the value of the agreement itself.