The Trump administration on Wednesday declined to renew the trilateral treaty agreement with Mexico and Canada in its current form during a scheduled six-year review, with the countries now expected to continue negotiations over proposed changes. U.S. Trade Representative Jamieson Greer stated that the United States did not agree to renew the United States-Mexico-Canada Agreement (USMCA) in its current form following a virtual meeting with counterparts from Mexico and Canada. The agreement will remain in force while the three countries continue discussions to address what Washington described as shortcomings in the treaty and U.S. trade deficits with its North American trading partners.

US Says Current USMCA Needs Changes

The USMCA governs trade among the three countries and replaced the North American Free Trade Agreement in 2020. Greer indicated that the U.S. aims to address specific economic concerns rather than extending the pact as is. The U.S. is scheduled to hold a third round of bilateral negotiations with Mexico during the week of July 20. In December, Greer had hinted that the Trump administration was weighing a potential withdrawal from the USMCA in 2026, although no formal move has since been announced.

Canada, Mexico Back Continued Negotiations

Mexico’s Economy Minister Marcelo Ebrard said the treaty provided two possibilities: it could extend the agreement for another 16 years with unanimous approval, or keep it in force through 2036 with annual reviews. Canadian Trade Minister Dominic LeBlanc reaffirmed Canada’s support for renewing the agreement, saying the three countries had agreed to continue discussions to ensure North America’s trade framework supports "prosperity and competitiveness." He added that Canada would continue discussions with the U.S. on sectoral tariffs covering steel, aluminum, autos and lumber.

Why It Matters

The USMCA governs roughly $1.6 trillion in annual trade across North America. Last month, President Donald Trump criticized the USMCA, saying the U.S. ran trade deficits with both Canada and Mexico rather than surpluses, adding that the agreement should deliver better terms for the U.S. The decision to shift negotiations introduces uncertainty for businesses, though the agreement remains active during talks.

The United States manufacturing sector showed signs of moderation in June, with two closely watched gauges — the S&P Global Manufacturing Purchasing Managers' Index (PMI) and the ISM Manufacturing PMI — both declining from their prior readings and missing market estimates. Despite the softening, both indices remained above the critical 50.00 threshold, signalling that the sector continued to expand, albeit at a slower pace.

June PMI Readings at a Glance

The following table summarises the key data points for both US manufacturing PMI releases for June:

S&P Global Manufacturing PMI

The S&P Global Manufacturing PMI registered at 53.90 in June, marking a decline of 1.80 points from the previous reading of 55.70. The actual figure also fell short of the consensus estimate of 55.70, underscoring a broader softening in manufacturing conditions. A reading above 50.00 continues to signal expansion in the sector, but the gap between the actual and estimated figures points to a more subdued performance than anticipated.

The decline suggests that while US manufacturers maintained growth momentum, the rate of expansion eased measurably during June. Market participants and analysts closely track the S&P Global Manufacturing PMI as a leading indicator of industrial sector health and broader economic conditions in the United States.

ISM Manufacturing PMI

The Institute for Supply Management (ISM) Manufacturing PMI for June came in at 53.30, down from the prior reading of 54.00 and below the market estimate of 53.90. The 0.70-point decline mirrors the broader trend of easing momentum seen in the S&P Global reading, reinforcing the narrative of a manufacturing sector that continues to grow but at a more measured pace. The ISM Manufacturing PMI is widely regarded as one of the most authoritative gauges of US factory activity, making the miss against estimates a closely watched development for market participants assessing the health of the industrial economy.