Mexico, US Advance USMCA Talks Ahead of Deadline

Mexico and the United States completed a second USMCA Joint Review round in Washington on June 15–17, advancing rules of origin negotiations for industrial goods and opening talks on agriculture, labor and the environment, with a third round set for Mexico City on July 20. The process carries immediate consequences for Mexico's steel, aluminum and automotive sectors, where Section 232 tariffs of 50% have cut steel exports 36.6% and eroded automotive output, while the July 1 trilateral deadline under Art. 34.7 is expected to pass without a comprehensive resolution. Manufacturers, exporters and investors operating across North American supply chains face prolonged uncertainty over regional content requirements, tariff exposure and market access conditions.

Mexico and the United States completed a second bilateral negotiating round of the USMCA Joint Review in Washington, D.C., from June 15 to 17, advancing discussions on rules of origin for industrial goods and economic security while opening conceptual talks on agriculture, labor and the environment. Minister of Economy Marcelo Ebrard and US Trade Representative Jamieson Greer met separately on June 19 to discuss the bilateral relationship and the broader review process, with a third round scheduled for Mexico City on July 20.

In a joint statement, the two governments said teams made headway on rules of origin for certain industrial goods and economic security, and agreed to support the creation of a committee to review implementation of Chapter 12 of the USMCA, covering sectoral annexes, with the aim of improving regulatory compatibility. Talks on steel, aluminum and automotive trade also featured in the round.

"During this round, the teams of Mexico and the United States advanced conversations on rules of origin for certain industrial goods and economic security, and initiated conceptual discussions on agriculture, labor and the environment," the two governments said in the joint communiqué. "The negotiations focused on ensuring that the Agreement benefits the economies of Mexico and the United States, and that the benefits of the same fall primarily on the signatory parties."

July 1 Decision Point

The completion of the second round comes days before a critical milestone under Art. 34.7 of the USMCA, which sets July 1, 2026, as the date for the three parties to convene and determine the agreement's future. Ebrard said a virtual meeting with counterparts from Canada and the United States will take place on that date for each country to present its position on what comes next.

"On July 1 we are going to have a virtual meeting with our colleagues from Canada and the United States; we will present Mexico's position and they will do the same regarding what comes next with the free trade agreement," Ebrard said in a video message from Washington. He outlined three possible outcomes: an automatic 16-year extension to 2042, a 10-year continuation with periodic reviews, or other alternatives.

Both Ebrard and Greer have signaled that the July 1 deadline will not produce a comprehensive resolution. Ebrard publicly acknowledged the review is unlikely to produce a clean 16-year extension, warning that negotiations could lead to annual reviews over a decade. Greer echoed that assessment, saying at a Hudson Institute event: "I think we probably will not resolve all the issues by July 1," adding that President Donald Trump "has made clear that he is dissatisfied with many of the outcomes of the USMCA."

Tariff Pressure and Trade Exposure

The negotiations are unfolding against a backdrop of tariff burdens on Mexican exports. Mexico paid US$22.988 billion in tariffs at US customs in the 12 months through April 2026. Section 232 tariffs of 50% on steel and aluminum and 25% on automotive goods not meeting USMCA content thresholds have weighed on key sectors. Steel exports to the United States fell 36.6% in 2025, pushing domestic steel capacity utilization to 55%, while automotive exports declined 5.1% year over year from January to April 2026, to US$48.638 billion.

Mexico has formally requested the elimination of Section 232 tariffs on steel, aluminum and automobiles as part of the review. "As for steel and aluminum, the 50% rate seems unacceptable to us; it has no justification whatsoever," Ebrard said during the first formal round in May.

Despite the tariff exposure, Mexico continues to register a trade surplus with the United States, though the gap has narrowed from nearly US$63 billion in 1Q25 to US$47 billion in 1Q26. Mexico Business News also reported in June that USMCA-compliant goods, representing roughly 85% of Mexico's export volume to the United States, are exempt from a proposed additional 10% tariff under a Section 301 forced labor investigation announced June 2, covering 60 economies.

Canada's Absence and Trilateral Dynamics

The Canadian delegation has remained absent from the bilateral Mexico-US negotiating track. Canadian Prime Minister Mark Carney said in Dublin that he does not believe the Trump administration wants major structural changes to the agreement. "The United States has been clear. They do not want to change the fundamental structure of the pact," Carney said. Both Canada and Mexico have formally notified their partners of their intention to renew the USMCA for 16 additional years, to 2042.

The United States has raised approximately 60 issues with Mexico in the review process, roughly double the number it has raised with Canada, according to Canada's government. Mexico Business News reported that a national consultation spanning all 32 states and 573 companies and associations found 84% of participants rated the USMCA's impact as positive or very positive, with priorities including defending existing rules of origin and preserving free market access.

The third round of negotiations, set for July 20 in Mexico City, is expected to move into more detailed textual and substantive content, according to Ebrard. Consulting firm Ansley has noted that Trump's escalatory rhetoric has historically served as a pressure tactic in negotiations and that the review process is likely to extend well beyond 2026.