Q: North American negotiations are underway, when do you think the trade pact will be renewed?
A: July 1’s trilateral review will pass without renewing the U.S.-Mexico-Canada (USMCA) agreement, which moves into annual reviews while remaining in force. Rather than a hard deadline, July 1 opens a longer bargaining period, with Washington and Mexico already in formal talks over specific revisions and Canada gearing up for more pragmatic negotiations.
President Trump will continue to display indifference to the future of the deal, threatening withdrawal and escalating during the final stages of negotiation. But leaving the agreement remains unlikely as the administration has little incentive to undermine regional economic competitiveness.
On one hand, there are some incentives to get a deal done before the end of the year for American farmers and industry. It’s possible that some elements of a renegotiated deal may require Congressional action—though this is not certain—so the Trump administration may be concerned with the prospect of a Democratic House and/or Senate. There are also two opportunities to highlight a deal on high-profile stages at Asia-Pacific Economic Cooperation (APEC) in Shenzhen in November and the G20 in Miami in December.
However, there are other incentives that will likely drive negotiations into 2027:
- While trade affects a key election issue—affordability—trade policy rarely moves voters, and few follow the details. While farmers do care about USMCA, they also see that substantive negotiations have begun, so are unlikely to desert Republicans.
- S. Trade Representative (USTR) Jamieson Greer has earned President Trump’s trust, and he is earnestly focused on rules of origin for USMCA to limit Chinese content in qualifying goods. These negotiations are incredibly technical and difficult—they will take time.
- The USTR team pursued revised rules of origin with Southeast Asia in 2025 and made little progress. In part because there were disagreements on the right approach, and in part because negotiating counterparts resisted. When USMCA is finished it could serve as a template for other trade deals. This provides an incentive to “get it right” but still finish up by early / mid 2027.
- Further, USMCA has not been fully implemented, and the U.S. government also wants to see progress on additional security measures. The White House may hold off renewing on paper until additional concrete actions by Mexico and Canada move forward in reality.
Q: The 10% Section 122 tariffs expire on July 24. What’s next for the Trump administration’s tariff wall?
A: When the 10% Section 122 tariffs expire on July 24, the administration’s next move is not a retreat but a shift to a more durable Section 301 tariff architecture. USTR has already proposed forced labor tariffs of 10% to 12.5% across 60 economies. These measures are the first replacement vehicle for the previous reciprocal tariffs, as they rebuild the base level of the tariff wall while resting on a clearer statutory and legal record. These measures are the first replacement vehicle for the previous reciprocal tariffs, as they rebuild the base level of the tariff wall while resting on a clearer statutory and legal record.
The next decision point is the excess-capacity investigation, where the administration must choose whether to move quickly with a second tranche of tariffs on 16 economies or delay until more favorable economic and political conditions. The administration does not seem to be in a rush. Why?
- It doesn’t affect continuity. Since the 10-12.5% forced-labor tariffs will be ready by July 24, the current tariff level will remain. The higher reciprocal tariffs fell in February, so there’s no real reason they need to be reinstated in July.
- If the Iran peace deal holds, oil prices will likely still take time to recover. Adding higher tariffs while energy prices are elevated will impact consumer and voter sentiment.
- The threat of these tariffs remains, but the process to raise or lower them takes time once they’re in place. USTR and a few foreign counterparts, including India, could save themselves trouble with additional pre-negotiation to adjust rates before they are set.
That timing choice will affect both business confidence at home and U.S. negotiating credibility abroad; the longer new rates remain unresolved, the harder it is for companies and trading partners to plan around them.
Q: Trade might not be the top headline anymore, but what should we be watching for over the summer?
A: The late night press releases and morning notices continue, as USTR, the U.S. Department of Commerce and U.S. Customs and Border Protection push across multiple, detailed fronts. We’re watching customs reform, including the implementation of President Trump’s recent executive order to strengthen customs enforcement, as well as tariff refunds, consumer product safety requirements at the border, ongoing negotiations, more Section 301 investigations and forced labor enforcement.
Finally, the Office of the U.S. Trade Representative, the U.S. Department of Commerce and U.S. Customs and Border Protection do absorb public feedback, and we have seen adjusted rates and processes as a result. Engagement can be effective.
Contact us to learn more! Our teams are happy to provide trade explainers, policy briefings and work with you on your business and engagement strategies.
