International credit rating agency Moody’s Ratings has stated that Mexico is likely to retain preferential access to the US market following the initial phase of US-Mexico negotiations linked to the review of the US-Mexico-Canada Agreement (USMCA).
The first round of discussions concluded in May with an agreed negotiation timeline, supporting the agency’s baseline expectation that Mexico will continue to benefit from preferential treatment under the trade pact.
According to Moody’s, USMCA-compliant goods remain exempt from several recent US tariff measures, including the 10 percent global tariff introduced under Section 122 and tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The agency also noted that USMCA-compliant products were excluded from a recent Section 301 investigation concerning forced labor practices.
North American trade continues to expand
US-Mexico trade reached a record $872 billion in 2025, with Mexico maintaining its position as the largest US trading partner. Approximately 90 percent of trade among the US, Mexico and Canada currently benefits from USMCA exemptions. Since the agreement entered into force, trilateral trade in goods and services has increased by 37 percent, while foreign direct investment across the region has risen by 16 percent.
Despite these benefits, some Mexican exports continue to face US trade measures. These include a 25 percent tariff on automobiles and auto parts, 50 percent Section 232 tariffs on steel and aluminum products, a 50 percent tariff on semifinished copper products and copper-intensive derivatives, as well as ongoing Section 232 investigations covering sectors such as timber, semiconductors, pharmaceuticals and critical minerals.
Steel and automotive sectors remain vulnerable
Moody’s believes a complete departure from the trilateral USMCA framework remains unlikely. However, the agency noted that bilateral negotiations between the US and Mexico are becoming increasingly significant. The second round of negotiations is scheduled for July 16-17, with final discussions expected during the week of July 20. Moody’s indicated that negotiations are likely to be particularly complex in areas including rules of origin, steel, automobiles, energy, labor and dispute settlement mechanisms.
The agency identified the steel and automotive sectors as among the industries most exposed to policy changes. Mexican steel exports remain subject to 50 percent Section 232 tariffs, while the automotive sector faces both a 25 percent tariff and the possibility of stricter origin requirements.
Trade uncertainty expected to remain elevated
According to Moody’s, tighter trade rules, tariffs and broader policy conditions could delay a final agreement and negatively affect investment, trade flows and Mexico’s medium-term economic growth. The agency also expects uncertainty to remain high regardless of the outcome of the review process. Legal challenges to US tariffs, including the US Supreme Court’s decision invalidating IEEPA-based tariffs, have added further uncertainty to the trade policy environment.
Moody’s noted that if the parties fail to agree on an extension during the 2026 review, annual reviews of the agreement would begin in 2027, potentially creating long-term uncertainty for investors and supply chains throughout North America. The agency added that China’s growing role in North American supply chains will be another key topic during the review. Moody’s expects the US to explore coordinated investment-screening mechanisms with Canada and Mexico, while noting that Mexico has already imposed tariffs on imports from China and Vietnam and increased tariffs on certain non-preferential trading partners.