The United States and Mexico have begun preliminary talks ahead of the July 1, 2026, mandatory joint review of the Unted States-Mexico-Canada Agreement (USMCA). US Trade representative (USTR) Jamison Greer and Mexican Secretary of Economy Marcelo Ebrard announced the start of technical discussions ahead of the July review, with a preliminary virtual meeting on March 17th, and a first formal round on March 18th with some in person elements in Washington.
The July 1, 2026, joint review is required under Article 34.7 of the USMCA, the sunset clause deliberately added during the 2018-2020 renegotiation that replaced NAFTA. At the insistence of the first Trump administration, negotiators replaced NAFTA’s permanent structure with a 16-year term and a mandatory review at the six-year mark so future governments could force updates rather than let the deal grow stale. This is the first time the mechanism is being tested. At the review on July 1, the three parties must decide whether to extend the agreement for a fresh 16-year term, resetting the clock to 2042 from 2036, and shifting to annual reviews.
Based on trade data, it is unlikely the agreement will be allowed to expire. US exports of goods and services to Canada and Mexico have risen 56 percent since 2020, when the USMCA came into force. Canada and Mexico have become the United States’ top two trading partners.
Mexico’s top priority in negotiations is to eliminate tariffs, especially Section 232 on steel and aluminum, returning to pre tariff conditions. Although Section 232 tariffs are a separate US national security measure outside the USMCA text, Mexican negotiators are tying their removal directly to the review process. In exchange, Mexico offers working towards reduced reliance on imports from outside the USMCA markets, strengthening rules of origin to support in stopping economies like China from using back door routes for inputs, and enhancing North America supply chains.
The US’s stance aligns on tighter rules around country of origin and non-market inputs. However, the US refuses a direct extension of the agreement as it stands. This sentiment was embodied in a six-page public letter from the President and CEO of the American Iron and Steel Institute (AISI), Kevin Dempsey, to Ambassador Greer. Dempsey called for stricter standards around steel origins and stopping the use of Mexico as a bypass route. Dempsey argued on behalf of US producers that these stricter rules would incentivize American companies purchasing steel and parts to do so from American companies domestically. He argued that the USMCA was a needed update to NAFTA and helped to boost US steel manufacturing further and created even more jobs.
Also, the Steel Manufacturers Association (SMA) applauded the USTR’s new section 301 overcapacity probes and again emphasized how 50 percent tariffs revitalized US steel and jobs, a direct counter to Mexico’s zero tariff push.
Sentiment from the Mexican Steel industry is not as favorable, as CANACERO president Sergio de la Maza pointed out that plants are at 55 percent capacity, the lowest in 25 years, indicated there is an 8.1 percent drop in finished steel output, and there is a 10.1 percent consumption drop in 2025. Mexico runs a 2.5 million mt steel deficit with the US, that deficit partly attributed to Mexico quickly becoming the top US scrap buyer in the world after recent slowdowns in Turkish Scrap purchases. Mexico argues that, with the aforementioned decreased output, the finished steel may have nowhere to go and would long term result in a decline in Mexican purchases of all steel from the US, including finished parts for the auto industry.
These are the first steps in a bilateral discussion that will later incorporate Canada, who also wants a zero-tariff agreement, citing a long-standing symbiotic relationship between Canada and the US. However, given the declared objectives of the Trump administration, meaningful relief on steel tariffs appears unlikely in the near term for either Mexico or Canada.