U.S. set to pass on renewing trade deal behind HVAC tariff breaks

The Trump administration is expected to declare on Wednesday that it will not renew the U.S.-Mexico-Canada Agreement (USMCA), the trade pact that has insulated the HVAC industry from a chunk of tariffs over the past year, according to a Reuters report published Tuesday. 

Yes, but: That wouldn’t terminate the deal altogether. 

Catch up quick: In March 2025, President Trump issued a tariff exemption for certain products covered under the USMCA, including an array of HVAC and water heating products, which remains in place today. 

• A clause in the agreement, which took effect on July 1, 2020, requires a formal review every six years, allowing the countries to decide whether to renew, renegotiate, or terminate it, with Wednesday marking that point.

How it works: If all three countries agree to renew the deal, it continues for another 16 years. If the U.S. elects not to renew, as Reuters reported, the deal remains in place but enters a 10-year period of rolling reviews, with the countries meeting annually until they reach an agreement. 

• Only if no renewal is reached by 2036 — or if a country explicitly withdraws, providing six months’ notice — will the deal be terminated.

What’s happening: “Trade chiefs from the U.S., Mexico and Canada are expected to meet virtually on Wednesday and declare whether they ​want to extend the pact for another 16 years,” Reuters wrote Tuesday. 

• While Mexican and Canadian officials have said they want to renew the deal, Trump has recently sent mixed signals, in June telling reporters that he would “prefer” not to have the USMCA but adding that he “may sign it,” as Homepros previously reported. 

Why it matters: While most HVAC equipment sold in the U.S. is manufactured domestically, Mexico and Canada are two of the U.S. HVAC industry’s top three largest foreign suppliers.

Looking ahead: “We expect July 1st to come and go, and for the ​United States to not confirm its wish to extend,” Greta Peisch, a former General Counsel for the Office of the United States Trade Representative, told Reuters, adding that it’s unclear “whether the U.S. says exactly what it’s looking for in a public way” after the meeting. 

• Meanwhile, U.S. and Mexican officials are scheduled to hold the third of three rounds of USMCA negotiations on July 20, suggesting the administration is open to preserving the deal with concessions, rather than exiting outright. 

The White House didn’t respond to a request for comment on Reuters’ report and how the decision might affect the HVAC industry exemptions.