Mexico - June 2026

Mexico kicked off trade negotiations in Mexico City (CDMX) with the US – but without Canada – ahead of the mandatory joint review scheduled for 1 July of the US-Mexico-Canada Agreement (USMCA). The first official round of the negotiations aimed at extending the free trade pact for 16 years took place on 28-29 May, with two further bilateral rounds between the US and Mexico due to follow.

Canada’s absence at the launch of the negotiations that could reshape North American trade rules cast a cloud of uncertainty over the future of the three-way deal that underpins around US$1.6tn in annual trilateral trade. Analysts say the US is attempting to divide and conquer, replicating its original negotiating strategy for the USMCA first signed into law in 2020: having secured unilateral concessions from Mexico, it could then use that as leverage to pressure Canada into signing on. Formal negotiations between the US and Canada have yet to begin, with US Trade Representative (USTR) Jamieson Greer citing “significant trade issues” and ongoing disputes over steel, aluminium, and other sectoral tariffs on 27 May. He criticised Canada for “retaliating” against US tariffs, accusing it of being one of only two countries – along with China – to do so.

Nevertheless, Mexico’s Economy Minister Marcelo Ebrard said the talks with the US were “one of the most important in the world”. On 2 June he reiterated Mexico’s firm support – a position which is shared by Canada – to formally renew the trade pact: “Mexico’s intention and position is that the treaty should be extended…Keep in mind that the treaty will remain in ‌effect ⁠for many more years, but we would like it to be extended for 16 years.”

Like Mexico, Canada is pushing to renew the USMCA for 16 years, with the Canadian minister for US trade, Dominic LeBlanc, calling the deal “highly beneficial to each of our countries” in letters sent to US and Mexican counterparts. On 2 June, LeBlanc met with Greer in Washington, describing the meeting as lengthy and positive, while warning of turbulence ahead.

“We are in a formal conversation with the US. Hopefully tomorrow we can get Canada to participate,” Ebrard said on 1 June, emphasising that Mexico would like Canada to join the conversations “as soon as possible”, while noting that this depends on talks between Canada and the US.

The 16-year extension is one of several possible outcomes of the review. If all parties do not agree to extend by 1 July and no alternative agreement is reached, the deal would enter a cycle of annual reviews before expiring in 2036, assuming no resolution is reached in the meantime. Another possibility is that one country pulls out of the deal completely, as US President Donald Trump has threatened to do, well aware that the USMCA has protected Mexico and Canada from many of his administration’s tariffs.

Negotiation rounds

The USTR office noted that the first negotiating round focused on “economic security and rules of origin for key industrial goods”. According to Ebrard, discussions centred on the automotive sector and the steel and aluminium sector, both of which are subject to steep US tariffs, as well as the medical device sector. With the deputy USTR, Jeff Goettman, leading the initial US delegation to Mexico, Ebrard denied that Greer’s absence diminished the importance of the talks, explaining that Greer had been called to a cabinet meeting in the US.

Two further negotiating rounds were scheduled to follow the first: one from 16-17 June in Washington, including discussions on “agriculture and a level playing field”, according to the USTR; and the third and final round in CDMX during the week of 20 July, suggesting that the USMCA review will extend past the initial 1 July deadline.

Ebrard said that future talks would focus on labour issues, critical minerals, the agricultural sector, and economic security. He added that Mexico would address US tariffs on key sectors, explaining that the 50% tariff on steel and aluminium was unsustainable and unjustified, and that tariffs on the automotive sector needed to be considered as part of a “systemic approach” to the industry, including regional rules of origin. Currently, vehicles and car parts that fail to meet USMCA rules of origin are subject to 25% tariffs, with the tariffs only applying to the value of vehicles’ non-US content.

The US is pushing for stricter rules of origin, higher regional content, tighter labour compliance, and stronger measures to reduce dependence on inputs from beyond the region, with the automotive sector emerging as one of the most sensitive areas. The US is reported to be demanding that regional automotive content requirements be raised from 75%. Washington also wants to eliminate loopholes in the existing arrangements – specifically targeting Chinese components routed through Mexico – and has pressured Mexico to align its steel and aluminium import tariffs with US rates.

Although Mexico is open to tightening regional content rules to maintain preferential US market access, officials insist there should be no tariffs between the two countries. “What do we want? No tariffs. But [US officials] say, ‘No, well, we want tariffs, tariffs, tariffs’,” said Ebrard on 1 June. Mexico has already tried to appease Washington by imposing tariffs on 1,400 Chinese import products, as well as addressing 52 US trade demands [EB-26-01].

The US’ attempt to present Canada with a take-it-or-leave-it deal has been attacked as one-sided and unacceptable by Canadian executives, accusing the Trump administration of ignoring its commitment to duty-free trade. US officials say their aim is to strengthen the US manufacturing sector, and that they will maintain at least some ⁠tariffs on Mexican and Canadian industrial goods, even if at preferential rates. If they are better than rates anywhere else in the world, some observers in Mexico and Canada have described this as an acceptable outcome.

If the three nations fail to jointly confirm an extension by the July deadline, prolonged market uncertainty could drag down regional manufacturing investments, analysts warn. Mexico’s central bank (Banxico) has already cut its 2026 growth estimate to 1.1% from a previous forecast of 1.6%, citing weak investment due to uncertainty surrounding the USMCA review, especially in industries with long planning horizons, such as automotive, aerospace, energy, logistics, and advanced manufacturing.

“Investment [in Mexico] is expected to continue to be impacted by both domestic and external uncertainty, in particular related to trade-policy direction in the US and the USMCA review,” wrote Alberto Ramos, an economist at Goldman Sachs, in a recent note to clients.

To further add to uncertainty, the US has recently made new tariff threats that affect both Mexico and Canada. On 2 June the USTR proposed 10% tariffs on Mexico, Canada, and 12 other economies for failing to impose measures to prevent the import of goods produced with forced labour. A further 46 economies face a proposed 12.5% tariff. Mexico’s economy ministry has stated that it will discuss the proposals in upcoming trade talks with the US, assuring that 85% of its exports would be protected under USMCA, a protection that it will hope to see extended for as long as possible.