As trade officials from the United States declined to renew the United States-Mexico-Canada Agreement (USMCA), officials from Canada and Mexico are poised to react as the deal, worth nearly $2 trillion a year, sees an uncertain future, El Financiero reported. 

The two US neighbours have previously signalled they want the agreement largely preserved, but President Donald Trump, who championed the accord during his first term, appears ready to use the review as leverage. 

"There is only a small chance" Trump will actually invoke the exit clause, given the toll it would take on US trade and investment, particularly in Midwestern swing states, Oxford Economics said in a report published on June 30. The firm added it no longer anticipates a broad rollback of tariffs, forecasting instead possible "limited agreements to reduce sectoral tariffs". Mexico "appears to be the most exposed country, but its exports have held up", the report said, while Canada is attempting to diversify its export markets, a process that will take time.

Roughly 80% of Mexican exports go to the US, and Mexico City has said its priority is securing preferential tariff treatment relative to other trading partners, or avoiding tariffs entirely. Two rounds of bilateral talks between Mexico and the US have already taken place, with a third round set for late July.

About 70% of Canadian goods exports, including millions of barrels of oil daily, are shipped to the US. Talks between Ottawa and Washington over tariff relief advanced substantially last October before Trump broke them off after Ontario ran a US television advertisement featuring former President Ronald Reagan criticising tariffs.

Some Canadian provincial liquor boards barred sales of American alcohol last year in response to Trump's tariffs, restrictions Washington wants lifted.

The White House has also raised concerns over the Mexican government's favouritism towards state oil company Petróleos Mexicanos (Pemex), curbs on private-sector participation in the energy industry, and the enforcement of labour laws in Mexico.

In the automotive sector, the US is pushing to tighten rules of origin to block the indirect use of manufacturing components sourced from outside North America, particularly China, seeking to raise the required share of US-made content in vehicles.

While the USMCA allows most food products to move duty-free, dairy remains an exception between the US and Canada. Ottawa caps the volume of American milk, eggs and poultry that can enter duty-free, while Washington maintains its own protections against Canadian dairy imports. The Canadian system has long drawn complaints from US farmers and lawmakers, and criticism from Trump, though it remains shielded by the political weight of Quebec's dairy sector.

Former Canadian and Mexican diplomats voiced cautious optimism that a new agreement would eventually emerge, according to comments made during a discussion with David Westin on Bloomberg's Wall Street Week programme.

Instead of renewing the deal on July 1, the Trump administration announced it will begin a decade of negotiations on amendments to it.

For now, the USMCA continues to shield most Mexican and Canadian goods from the broad import tariffs Trump has imposed on nearly all other US trading partners.