The United States says efforts to advance discussions on the North American trade pact are facing difficulties as negotiations with Canada remain stalled, raising concerns about the future of the Canada-United States-Mexico (CUSMA) Agreement.

U.S. Ambassador to Canada Pete Hoekstra said Washington believes the agreement has worked well but discussions with Ottawa have largely stopped, even as a mandatory review of the pact approaches this summer.

“There have been no substantive negotiations since October,” Hoekstra said during remarks at the Canadian Crops Convention in Toronto.

The comments highlight growing uncertainty around the future of the three-country trade deal, known as CUSMA in Canada and USMCA in the United States, which replaced the North American Free Trade Agreement in 2020 and is scheduled for a formal review on July 1.

The agreement underpins one of the largest trading relationships in the world. Canada and the United States exchange hundreds of billions of dollars in goods annually, with U.S. imports from Canada reaching about $411.9 billion and exports to Canada about $349.9 billion in recent years.

Under the current pact, more than 85 per cent of Canada-U.S. trade moves across the border tariff-free when products meet the agreement’s rules of origin.

If the agreement were weakened or allowed to lapse, trade between the two countries could fall back to World Trade Organization most-favoured-nation tariff rates. Under those rules, only about 40.5 per cent of Canadian exports to the United States would remain duty-free, with the remainder potentially facing tariffs that in some sectors can reach 25 per cent on trucks, up to 35 per cent on footwear and more than 30 per cent on some apparel products.

Such a shift would have significant implications for Canada’s export-driven economy, particularly in sectors such as energy, agriculture, manufacturing and autos that rely heavily on integrated North American supply chains.

Hoekstra said Washington still wants to move forward with the agreement’s renewal but expressed frustration that talks with Canada have not progressed.

“We think the agreement works,” he said, adding that both sides would benefit from continued engagement.

The situation contrasts with developments involving Mexico, where companies and government officials have been actively preparing for the upcoming review. Mexican business groups have signalled strong support for maintaining the agreement and have encouraged updates in areas such as digital trade and environmental standards rather than reopening core provisions.

Mexico also depends heavily on the deal, with about 80 per cent of its exports destined for the United States, reinforcing incentives for the country to maintain stability in the North American trade framework.

Analysts say the review process is intended to confirm the pact’s continuation for another 16-year period, but prolonged political disputes or stalled negotiations could create uncertainty for businesses and investors across the continent.

The three countries conduct nearly $2 trillion in combined trade annually, making the agreement one of the most important economic frameworks in the world.

With the review deadline approaching and little progress reported since last fall, the pace of negotiations in the coming months is expected to determine whether the North American trade deal continues largely unchanged or faces renewed pressure.