True Lies 2 was among James Cameron’s plans back in the 1990s, but the film never happened - why?. In 1994, Cameron teamed up once more with Arnold Schwarzenegger in the action comedy True Lies, in which Schwarzenegger had a different role than the ones he was used to play but he was still the lead - and there was a lot of action for him to not lose his “action star” status.
True Lies was a remake of the French comedy La Totale!, and it followed Harry Tasker (Schwarzenegger), a U.S. government agent who led a double life and had to balance his family duties with his job as secret agent. True Lies was a box office success, and even though it was not too well received by critics, viewers’ reactions were more positive as they found it to be quite entertaining - enough for Cameron to decide to make a sequel. Problem is, True Lies 2 never saw the light of day.
The fate of True Lies 2 was influenced by many factors, the first one being Cameron’s next project: Titanic. Production on Titanic was extensive, and the film was finally released in 1997, marking a turning point in Cameron’s career and delaying True Lies 2 a couple more years. Cameron reportedly had plans to make the sequel sometime in 2002, but the September 11, 2001, attacks changed his mind and decided not to move forward with it as he felt it wouldn’t be appropriate. Cameron’s next film project ended up being Avatar, in 2009, the highest-grossing film of all time until Avengers: Endgame took over the throne.
Prior to the release of Avatar, Cameron was asked about the future of True Lies 2, to which he replied that Schwarzenegger was still Governor of California and, therefore, was very busy, but they had spoken about the possibility of working together again once he left office, which he did in 2011. Schwarzenegger went on to star in a number of action films since then, such as The Last Stand, Escape Plan, Terminator Genisys, and most recently Terminator: Dark Fate. As for Cameron, he served as writer and producer in Alita: Battle Angel, producer in Terminator: Dark Fate, and is working on Avatar 2 and Avatar 3.
It’s very unlikely that a True Lies sequel will happen in the foreseeable future, with Cameron working on his Avatar sequels (which are no easy task) and Schwarzenegger enjoying all the action roles he can get, although True Lies is getting a TV adaptation for Disney+, but it's not a sequel. Most importantly, though, is the fact that Cameron isn’t interested on it anymore due to all the terrorist attacks that have happened since the first film was released, and if he feels like this is where the story should stop, then so be it.