WASHINGTON — Days before the nation celebrated its 250th anniversary on Independence Day, the Trump administration declined to renew the U.S.-Mexico-Canada Agreement (USMCA) in its current form, triggering annual reviews while negotiations continue over potential changes to the trade pact.

Although the agreement remains in effect until 2036 unless replaced or amended, the decision creates long-term uncertainty for North American manufacturing and cross-border supply chains. For HVACR contractors, manufacturers, and distributors, ongoing negotiations could affect equipment sourcing, component availability, and long-term business planning across the United States, Canada, and Mexico. The administration says it is seeking revisions aimed at reshoring manufacturing and addressing trade deficits before supporting a longer-term extension of the agreement, according to Reuters. 

The United States-Mexico-Canada Agreement (USMCA) replaced the 1994 North American Free Trade Agreement (NAFTA) after being signed in November 2018 and entering into force on July 1, 2020, during President Donald Trump's first term in office. The agreement modernized North American trade rules with updated provisions covering digital trade, intellectual property, labor, the environment, customs procedures, and stronger rules of origin for manufactured goods, including automotive products. Unlike NAFTA, USMCA includes a built-in six-year joint review and a 16-year term, allowing the three countries to assess whether to extend the agreement or continue annual reviews if consensus is not reached. 

U.S. Trade Representative Jamieson Greer issued a statement saying, "The United States will continue to engage with Mexico and Canada to address the Agreement’s shortcomings and our trade deficits with these countries. However, the Agreement remains in force pending resolution of these issues or until the Agreement’s termination."

According to ACCA, a large share of the residential and commercial HVAC equipment installed in the U.S. is manufactured in Mexico, and Canadian steel and aluminum feed into production on both sides of the border. ACCA notes that the USMCA preferences have historically kept much of that trade duty-free; however, the organization has reported that Section 232 tariffs already apply to imported HVAC equipment — recently reduced from 25% to 15% for certain residential products.

The open question now is whether annual reviews erode the remaining USMCA benefits manufacturers rely on. ACCA has urged the Trump Administration to exempt HVACR equipment from Section 232 tariff changes, and contractors can add their support by signing ACCA's ACTion Alert:

Because negotiations could continue through annual reviews until the three countries reach an agreement on the pact's future, HVACR businesses should monitor developments closely. Any changes to the agreement could have downstream effects on equipment sourcing, component availability, pricing, and long-term business planning, making trade policy an increasingly important factor in operational and investment decisions.