Mexico - May 2026

On 30 April the Office of the US Trade Representative (USTR) removed Mexico from its priority watch list for Intellectual Property (IP) Protection and Enforcement, which Mexican officials have interpreted as a positive sign ahead of the US-Mexico-Canada Agreement (USMCA) review.

Mexico had been on the priority watch list since last year but has now been moved onto the watch list. It is one of 19 countries on this list, with six remaining on the priority watch list. “Using all the enforcement tools we have to address unfair trade practices is a top priority,” said USTR Jamieson Greer in a statement. “We have rigorously reviewed our trading partners’ IP practices and expect to take action where needed to protect American innovators and creators globally.”

The move comes after Mexico has made significant improvements to IP enforcement, including patent processing, anti-piracy enforcement, and pharmaceutical IP protections. It has also made public commitments to further improvements in the immediate future, such as changes to the federal penal code and the federal copyright law. Although the USTR decision means that Mexico remains subject to monitoring, Economy Minister Marcelo Ebrard hailed the move as a “very good signal” ahead of the first bilateral negotiating round of the USMCA review on 25 May, with the review itself due by 1 July.

USMCA review

In a statement published on 20 April, the USTR set out four key priorities for the review following a meeting between Greer and Mexico’s President Claudia Sheinbaum. These include efforts “to advance important technical discussions…on economic security and complementary trade actions, strengthened rules of origin for key industrial goods, collaboration on critical minerals, and to resolve outstanding bilateral trade irritants”. As a result, the watch list decision appears to recognise Mexico’s technical cooperation before more significant talks get underway.

Economic security and complementary trade actions likely refers to efforts to prevent Chinese firms from gaining preferential access to the US market via Mexico, including anti-transshipment efforts; greater scrutiny of Chinese supply-chain penetration; and closer cooperation on screening new investments. Strengthened rules of origin for key industrial goods reflects a desire for tighter restrictions on the origin of parts used in Mexico’s automotive manufacturing sector, for example, while collaboration on critical minerals chimes with the recent joint action plan for the sector, published in February. Finally, “bilateral trade irritants” is a catch-all term for a number of ongoing issues, which may include Mexico’s struggles to comply with a bilateral water treaty; efforts to eradicate the New World Screwworm (NWS); Mexico’s genetically modified corn ban; and US agricultural tariffs. 

These priorities reflect the fact that the USMCA is moving away from free trade towards a tariff and economic security agenda, according to a growing consensus in Mexican media and academia. For example, local business media outlet El Financiero forecasts that the renegotiation will result in a “painful extension” of an agreement that will persist formally but with “more requirements, more controls and more administrative discretion”. The article also highlights the fact that automotive exports to the US fell 3.4% year-on-year in March, while non-automotive manufacturing grew 43.9% in the same period, as evidence that US tariffs are already changing the shape of Mexican industry. Greer has signalled that tariffs on steel, aluminium, and vehicles will remain part of Washington’s toolkit as part of continued efforts to rebuild US manufacturing. The US has also become more active in using dispute and labour enforcement mechanisms under the USMCA than its predecessor, the North American Free Trade Agreement (Nafta), suggesting that tariffs, compliance mechanisms, and industrial policy will be features of the trade relationship for the foreseeable future.

The idea that the era of free trade is over is echoed by an article from the Universidad Iberoamericana Ciudad de México (Ibero), a private university in Mexico City (CDMX), which emphasises that the review is no longer simply a commercial matter, but a geopolitical one that feeds into growing US-China competition. Academics highlighted the stakes for Mexico, estimating that the US-Mexico trade relationship supports 15m-17m jobs in Mexico, which sends more than 80% of its exports to the US market. However, the US also has a lot to lose due to the high level of integration between the two economies, meaning that a complete cancellation of the agreement is unlikely, according to Gerardo Herrera Villanueva, from the university’s business studies department. The more likely outcome is a “less beneficial” agreement with new US tariffs, he said. 

In this light, the Instituto Mexicano para la Competitividad (Imco), an independent Mexican thinktank focused on competitiveness, has called on President Sheinbaum to embrace this shift and pursue an economic security agenda which goes beyond the government’s stated aims of preserving the trilateral agreement and eliminating US tariffs. “Beyond a defensive strategy, Mexico should leverage the USMCA review to transition toward a regional economic security leadership agenda, aimed at strengthening North America’s productive, technological, and logistical integration,” said Imco. The US-Mexico critical minerals action plan is one indication that this shift is already underway, and further integration would help advance Sheinbaum’s efforts to protect Mexico’s domestic industries from Chinese competition, but they could also drive domestic concerns around sovereignty and overreliance on the US market.

Looking ahead, Mexico appears to have stepped up efforts to hedge between the US and Canada, potentially improving its leverage in negotiations with Washington, with Ebrard leading a significant delegation to Canada in early May and committing to maintaining free trade with Canada. However, it is worth noting that their interests only partially align, meaning that the two countries may move apart again if it better serves their interests in negotiations with the US.

Mexico’s cause may also be furthered by growing US domestic pressure from industries such as automakers, with industry groups calling on President Donald Trump to extend the trade deal rather than renegotiate or draw up new bilateral deals.

• US industry groups

Major automakers including Nissan, Toyota, and Hyundai have warned Trump that they could withdraw lower-cost models from the US market if there are substantive changes to the existing agreement. Industry groups in other sectors such as dairy farming are also calling on Trump to extend the agreement. Mexico’s share of US trade, which reportedly hit a record 16.3% of the total in the first quarter of this year, strengthens its negotiating position, although it remains hugely reliant on the US market. 

Sheinbaum and her government will have to tread a fine line between rushing into a deal to end uncertainty around US market access and stalling to try and secure the most advantageous terms possible. Officials will also have to be mindful of the effects of their actions on relations with China, which provides a significant portion of Mexico’s imports, including manufacturing inputs, on inflation and export industries.

In conclusion, the USTR decision to move Mexico onto its IP watch list is a positive sign for negotiations, but it will not have much bearing on the USMCA review, which is about redefining structural issues around economic security. While Trump’s track record of rapid fire policy changes makes it difficult to predict the future shape of North American trade with any great certainty, it is clear that Washington’s priorities have shifted from trade liberalisation to harnessing Mexican production as part of a US-led economic security framework that boosts regional manufacturing and reduces reliance on Chinese supply chains.