The Trump administration announced July 1 that it will not renew the United States–Mexico–Canada Agreement (USMCA), the trade pact that governs most of the equipment, parts, and materials moving across North American borders. The agreement now enters a cycle of annual reviews that could reshape trade rules over the next decade, affecting everything from equipment pricing to parts availability.
The trade deal is still in force — for now
Non-renewal isn’t termination. The USMCA remains in effect while the U.S. negotiates with Mexico and Canada, and tariff exemptions for USMCA-compliant goods still apply. But without a formal renewal, the agreement automatically expires July 1, 2036, and its terms are now subject to yearly reexamination instead of being locked in for another 16 years.
Administration officials pointed to trade deficits as the core issue. The U.S. ran a $46 billion goods deficit with Canada and a $197 billion deficit with Mexico in 2025, according to Reuters. Negotiations with Mexico are already underway, with a third round scheduled for the week of July 20. Talks with Canada have not yet started.
How USMCA uncertainty affects HVAC equipment prices
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. USMCA preferences have historically kept much of that trade duty-free, but as ACCA has reported, 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 administration to exempt HVACR equipment from Section 232 tariff changes, and contractors can add their support by signing our ACTion Alert:
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That protection isn’t going away tomorrow, but it’s no longer guaranteed long term. Annual reviews mean the rules manufacturers and distributors depend on could shift year to year, making it harder for OEMs to plan production and for contractors to predict equipment pricing. For an industry already managing tariff-driven cost increases and the refrigerant transition, it’s one more variable in every bid and every quote.
What HVAC contractors should do now
HVAC contractors should keep trade policy on their radar when pricing jobs, setting escalation clauses in contracts, and planning equipment purchases. ACCA is monitoring the USMCA review process and will keep members informed as negotiations develop.
For the latest on tariffs and equipment costs, visit ACCA’s Tariff Resource Center.
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