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United States–Mexico–Canada Agreement
The Agreement between the United States of America, the United Mexican States, and Canada (USMCA) is a free trade agreement among the United States, Mexico, and Canada, in effect from July 1, 2020. It replaced the North American Free Trade Agreement (NAFTA) implemented in 1994. Further, it 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 in the world.
All sides came to a formal agreement on 1 October 2018, and U.S. president Donald Trump proposed USMCA during the G20 Summit the following month, where he signed it, Mexican president Enrique Peña Nieto, and Canadian prime minister Justin Trudeau. A revised version reflecting additional consultations was signed on December 10, 2019. It was 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 1 July 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 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.
The United States–Mexico–Canada Agreement is based substantially on the North American Free Trade Agreement (NAFTA), which came into effect on January 1, 1994. The present agreement was the result of more than a year of negotiations including possible tariffs 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'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, ceasing to be part of negotiations for the Trans-Pacific Partnership, 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 Accord Canada–États-Unis–Mexique (ACEUM) in French; and in Mexico, it is called Tratado entre México, Estados Unidos y Canadá (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 (NAFTA).
† Including Guam, Puerto Rico, and the U.S. Virgin Islands.
‡ Including Puerto Rico.
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United States–Mexico–Canada Agreement
The Agreement between the United States of America, the United Mexican States, and Canada (USMCA) is a free trade agreement among the United States, Mexico, and Canada, in effect from July 1, 2020. It replaced the North American Free Trade Agreement (NAFTA) implemented in 1994. Further, it 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 in the world.
All sides came to a formal agreement on 1 October 2018, and U.S. president Donald Trump proposed USMCA during the G20 Summit the following month, where he signed it, Mexican president Enrique Peña Nieto, and Canadian prime minister Justin Trudeau. A revised version reflecting additional consultations was signed on December 10, 2019. It was 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 1 July 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 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.
The United States–Mexico–Canada Agreement is based substantially on the North American Free Trade Agreement (NAFTA), which came into effect on January 1, 1994. The present agreement was the result of more than a year of negotiations including possible tariffs 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'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, ceasing to be part of negotiations for the Trans-Pacific Partnership, 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 Accord Canada–États-Unis–Mexique (ACEUM) in French; and in Mexico, it is called Tratado entre México, Estados Unidos y Canadá (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 (NAFTA).
† Including Guam, Puerto Rico, and the U.S. Virgin Islands.
‡ Including Puerto Rico.