The Trump administration is pushing up against a July 1 deadline to renew the United States-Mexico-Canada Agreement (USMCA). President Donald Trump's public remarks are leading to fears among some Texas businesses that he could pull the U.S. out of the agreement.
When Trump negotiated the USMCA during his first term as president, to serve as a replacement for the North American Free Trade Agreement (NAFTA), he called it the “fairest, most balanced, and beneficial trade agreement we have ever signed into law.” But last week, he said he'd rather see it terminated than renew it.
"I would rather not have the agreement," Trump told reporters. "I may sign it, but we do better as a country if we don't have an agreement."
Michelle Schulz, a Dallas-based trade attorney, said she believes U.S. Trade Representative Jamieson Greer is less eager to withdraw from the USMCA than the president. But the decision is ultimately Trump's.
"I wouldn’t be surprised if the president did something dramatic and decided to terminate the agreement. I’m ready for anything, but it would not be helpful for our U.S. importers," Schulz said. "In fact, it would cause a great deal more disruption than the tariffs have already caused, in my opinion as a trade lawyer."
Schulz anticipates trade negotiations will continue past the July 1 deadline. If the deadline passes without a new agreement, the existing pact will expire in 10 years.
"Any of the three parties can withdraw at any time with notice," Schulz said. "So, if the president decides that he does want to withdraw entirely, he can give prior notice, and we may see within the year that we give notice of withdrawal. Hopefully, that’s not the case."
Trade, particularly trade with Mexico, is a major driver of the Texas economy. Texas has been the United States’ top exporting state for 22 consecutive years, and Mexico has been the state's leading trade partner for at least the past 17 years.
"The USMCA is not simply a trade agreement; it is a supply chain agreement," said Margaret Kidd, who chairs the logistics and supply chain management department at San Jacinto College. "It helps connect producers, processors, transportation networks, and consumers across North America, supporting economic resilience throughout multiple sectors but extremely relevant for agricultural groups and the automotive sectors."
Schulz said the energy sector would be especially vulnerable if Trump were to pull the U.S. out of the USMCA. Minerals and fuel oil account for the largest share of Texas’ exports to Mexico, having topped $34 billion in 2024.
"The way that the USMCA allows cross-border energy investment to flow freely and to allow electricity, natural gas, all those investments to flow freely right now, is really critical for manufacturing," Schulz said. "And when you think about energy grids, data centers, those kinds of things, we would face even greater uncertainty with regard to expanding in those areas in Texas and elsewhere. And so, threatening our relationship with Mexico in that area, it really threatens our ability to advance in energy here in Texas."
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