Energy Dispute Continues as USMCA Review Approaches

The dispute over energy policy between the United States and Mexico under USMCA has entered a fresh, more volatile phase amid shifts in US trade posture and Mexico’s continued push to prioritize state energy enterprises. As the 2026 joint USMCA review approaches, both countries are repositioning on energy and trade, setting the stage for sharper confrontation or recalibration on how energy markets operate across North America.

In July 2022, the United States formally requested consultations with Mexico under USMCA’s dispute settlement mechanisms, alleging that Mexico’s energy reforms discriminated in favor of PEMEX and CFE and disadvantaged US firms in renewables, electricity, natural gas, and retail fuel industries. That step underscored American concerns that Mexican regulatory changes, especially amendments to Mexico’s electricity law, would tilt markets in favor of state-owned power over private clean energy producers.

Since then, the issue has simmered. Recently, the US Trade Representative (USTR) nominee Jamieson Greer signaled renewed scrutiny during his confirmation hearing, warning that Mexico’s policies “unfairly favor state-owned energy companies … and undermine US-produced energy,” raising “serious concerns about Mexico’s compliance with USMCA.” That public signal suggests the incoming administration intends to press harder on energy obligations.

With Donald Trump back in the White House, many observers anticipate a more assertive US posture. In his first days back in office, Trump declared a national energy emergency and pledged to fast-track fossil fuel infrastructure and roll back environmental restrictions. His administration is reportedly preparing to leverage the USMCA review process to press Mexico on energy reforms. According to a White & Case analysis, Trump may withhold US approval for renewal unless Mexico concedes stricter text changes, especially in areas like electricity market access and state enterprise dominance. The United States is seen as positioning energy cooperation as a possible bargaining chip in the 2026 review.

Mexico, meanwhile, continues its path of reinforcing state energy control. Under the Sheinbaum administration, policies have favored CFE and PEMEX in power dispatch, reserved roles for state companies, and restricted private involvement. Critics argue these measures breach USMCA commitments on non-discrimination and equitable treatment of foreign investors. Mexico counters that its reforms reflect its sovereign right to manage essential sectors like energy. The Mexican government insists that protections for state enterprises under USMCA, combined with carve-outs for oil and power, shield its reforms from being construed as violations.

The Sheinbaum administration has begun structuring its approach to the 2026 USMCA review, signaling a more inclusive, but also more government-driven, model for trade consultations. The Cuarto de Junto, traditionally the formal liaison between the private sector and trade negotiators since the NAFTA era, has entered a period of uncertainty. Minister of Economy Marcelo Ebrard announced that instead of a small, exclusive negotiation group, Mexico will open consultations to 30 economic sectors. This move aims to give the process broader legitimacy but has also raised concerns among industry representatives who fear losing direct influence over key trade positions.

At the same time, Sheinbaum has established the Advising Council for Regional Economic Development and Relocation (CADERR), led by businesswoman Altagracia Gómez, to coordinate public-private dialogue on nearshoring and competitiveness. Members of CADERR, including Softtek’s Blanca Treviño, are expected to play a consultative role in shaping Mexico’s negotiation stance. This broader participatory framework reflects the administration’s intention to align trade policy with industrial and regional development goals. However, as the US adopts a tougher stance under President Trump’s return to office, Mexico’s new consultation model will face a crucial test in maintaining coherence, unity, and speed in defending national interests within the energy and trade chapters of USMCA.

Last year, some US energy industry groups were alarmed by tariff threats targeting Mexico. In 2024–2025, proposals surfaced to apply 25% tariffs on noncompliant Mexican goods, including energy exports, to pressure reforms. Though some tariffs were delayed, energy remains a sensitive front.

The 2026 USMCA review looms as a moment of truth. Under Art. 34.7, parties must decide whether to extend the agreement or trigger annual reviews. Most analysts expect the US to demand updates on contentious energy provisions as part of a broader renegotiation push. Mexico’s capacity to defend its energy autonomy while attracting investment will be tested. If negotiations falter, US firms may invoke state-to-state or limited investment arbitration under USMCA’s energy carve-outs, particularly as the agreement preserves ISDS for oil, power, and hydrocarbon sectors.