USMCA Review: Is Mexico Ready?

The United States-Mexico-Canada Agreement (USMCA) establishes in Article 34.7 that the parties must meet on July 1, 2026, the sixth anniversary of its entry into force, to evaluate its operation and decide whether to extend its validity for another 16 years.

As a result of this specific date and the fact that the United States plans to begin public consultations in October 2025, there has been talk of an "early review."

However, under the USMCA Implementation Act, the law by which the United States ratified the USMCA, the United States Trade Representative (USTR) must initiate the public consultation process 270 days before the start of the trilateral review, which is October 4, 2025.

The Office of the United States Trade Representative (USTR) will also be required to submit a report to the U.S. Congress outlining its assessment, recommendations, and position on the potential extension of the USMCA 180 days before the start of the review, which will be on January 3, 2026.

In this regard, the public consultations that the United States will begin in October are within the timeline established by its law. Mexico, for its part, does not have an equivalent formal mechanism, but has already begun preparatory meetings with the private sector and various business chambers.

In March, Trump imposed blanket tariffs of 25% on Mexico and Canada, although he later exempted all products and goods that met the USMCA's rules of origin.

As a result, the Mexican export sector continues to be severely affected, considering that, in 2024, 51.1% of Mexico's exports to the United States did not comply with the treaty.

Additionally, Trump imposed 25% tariffs on the automotive sector and offered Mexico and Canada the option of applying the tariff only to the value of non-US content. He also maintains 50% tariffs on Mexican steel and aluminum, as he does on other countries.

The president justifies these actions by arguing that Mexico takes advantage of the United States and the bilateral relationship is unfair; and that China uses Mexico as a means of access to the U.S. market.

This comes after the United States' trade deficit with Mexico in 2024 amounted to $171.8 billion, the second-highest after China, and equivalent to 14.3% of the total.

Trump maintains that the imposition of these tariffs will encourage American companies to relocate their factories from Mexico, thus promoting employment and investment. In this context, the USMCA could once again become a strategic tool to advance Trump's protectionist agenda, despite the fact that he himself originally negotiated and promoted the agreement.

Among the main pressure points for the United States in the treaty review, five key areas are identified: 1) a possible tightening of rules of origin to strengthen regional integration; 2) the incorporation of sectoral rules aimed at limiting China's presence in the North American market; 3) adjustments to the Rapid Response Mechanism to strengthen its scope or application; 4) changes to labor provisions (particularly wages); and 5) the inclusion of clauses aimed at strengthening legal certainty for investments.

While these potential changes to the USMCA could pose various short-term challenges for the Mexican economy, ranging from increased customs requirements to increased production costs, they also represent opportunities that could boost the country's economic growth.

If Mexican companies manage to capture a significant portion of the market share left by Asian companies in the region as a result of protectionist trade policies aimed at strengthening integration between the three countries, there would be an increase in production, profits, and job creation, which would more than offset the potential increase in costs.

Furthermore, adjustments to the rapid response mechanism and greater legal certainty would contribute to consolidating nearshoring and the Mexico Plan by fostering a better business environment. In other words, rather than generating concern, the early review of the USMCA will be positive for the country, as it can dispel uncertainty and continue strengthening the region's trade integration.

*The author is Director of Analysis at Grupo Financiero Monex