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The United States has declined to renew the landmark US-Mexico-Canada Agreement (USMCA) in its current form, a decision that prevents an automatic 16-year extension and sets the stage for annual negotiations — and potential instability — in one of the world’s most important trade pacts.

According to a senior U.S. official, the administration “chose not to rubber stamp a USMCA renewal without addressing existing issues,” signaling that Washington wants significant changes before committing long-term.

If the three countries cannot reach unanimous agreement on an extension, the deal effectively enters a 10-year countdown toward possible termination as early as 2036.

The USMCA, which underpins around $2 trillion in annual trade, replaced the 1994 NAFTA agreement six years ago with updated rules on digital trade, workers’ rights, and regional manufacturing. But ongoing disputes over automobile rules of origin, dairy market access, and concerns about third countries like China exploiting the pact have created friction.

The decision kicks off a period of heightened uncertainty for businesses across North America that rely on the stability of the agreement. While the U.S. Chamber of Commerce had urged a straightforward extension to maintain certainty for manufacturing and agriculture, some domestic trade groups welcomed the move, arguing annual reviews will give U.S. negotiators more leverage to fix perceived shortcomings.

For now, the free-trade deal remains in place, but the lack of a long-term commitment could complicate cross-border commerce at a time when global economic pressures are already high. The coming months of negotiations will be critical in determining whether the USMCA evolves into a stronger pact or risks unraveling under the weight of unresolved tensions.