Tracking the U.S.-Mexico Talks in the USMCA Review

• Mexico City, May 28-29, 2026

Automotive Rules of Origin

The automotive sector remains one of the most integrated industries in North America, supported by highly interconnected supply chains across Canada, Mexico, and the United States, Mexico, and Canada. In 2025, with the value of Mexican exports to the United States totaling $534.9 billion, Mexico stood out as the largest foreign source of automotive components to the U.S. market, accounting for 42 percent of all U.S. imported auto parts.

Under USMCA, vehicles must contain 75 percent North American content to qualify for duty-free treatment, up from 62.5 percent under NAFTA, USMCA’s predecessor. Washington hopes to up increase the rate for automotive Rules of Origin to 82 percent and introduce a requirement that at least 50 percent of a vehicle’s value be sourced from the United States, per reports on the first round of talks. Moreover, China’s role in North American supply chains has cast a shadow over USMCA’s renewal amid concerns that Beijing's rising investments in Mexican factories amounts to an attempt to sidestep tariffs on U.S.-bound goods. Meanwhile, late last year, Mexico’s Congress approved tariffs as high as 50 percent on some 1,400 products from China and other Asian countries with which it does not have trade deals. The move, designed to protect Mexican domestic industry, could also be seen as appeasing U.S. concerns.

Mexico has resisted proposals to raise automotive content requirements beyond the current 75 percent Regional Value Content threshold, arguing that stricter rules of origin could increase production costs and undermine the competitiveness of North American supply chains. This position reflects the importance of the automotive sector to Mexico’s economy: approximately 79.7 percent of vehicles produced in Mexico were exported in 2025, with more than 80 percent destined for the United States.

Steel and Aluminum

This round of talks took place against the backdrop of U.S. Section 232 tariffs involving 50 percent tariffs on steel and aluminum imports, which Mexico has identified as a key concern in the review process.

Discussions focused on whether the current USMCA requirement that 70 percent of a producer’s steel and aluminum purchases must originate in North America should be strengthened through stricter verification and sourcing rules. U.S. officials argued that stronger requirements would reinforce North American production and limit the use of steel and aluminum originating from non-market USMCA economies.

Economic Security

In the first round, discussions focused on how to reduce North America’s dependence on external suppliers for strategically important industrial inputs. The Office of the U.S. Trade Representative (USTR) indicated that talks focused on supply-chain resilience in sectors including automotive electronics, semiconductors, critical minerals, and other key industrial goods, with the goal of strengthening North American production capacity. 

• Washington, DC, June 16-17, 2026

Agriculture

Mexico is the United States’ largest agricultural trading partner with the total value of two-way agricultural trade hitting $74.5 billion in 2025. 

In that light, the second negotiating round focused heavily on agriculture with discussions covering market access, biotechnology, sanitary and phytosanitary (SPS) measures, and food security. U.S. agricultural groups continued to advocate for stronger USMCA provisions to require that biotechnology-related trade measures be based on scientific evidence, following the dispute over genetically modified (GMO) corn. While Mexico repealed restrictions on imports of GMO corn for human and animal consumption after an adverse USMCA ruling, it continues to prohibit the domestic cultivation of biotech corn. U.S. producers have long called for expanded market access for ethanol exports and stronger enforcement of SPS commitments. Mexico, meanwhile, emphasized preserving stable access to the U.S. market and avoiding new regulatory measures that could disrupt the highly integrated North American supply chains.

Energy Emerges as a New Negotiating Topic

Energy, an issue that sits at the intersection of Mexico’s sovereignty agenda and its USMCA commitments, was prominent during the Washington round. Mexico’s constitutional energy reform—approved in October 2024 and the secondary legislation enacted in March 2025—reinforced the role of the state in the energy sector, including provisions requiring the Federal Electricity Commission (CFE) to maintain at least 54 percent of domestic electricity generation. U.S. stakeholders continue to express concerns regarding these policies favoring state-owned enterprises, such as state oil firm PEMEX and CFE, at the expense of private and foreign investors, raising broader questions about regulatory certainty, market access, and compliance with USMCA commitments.

Level Playing Field

Negotiators also continued discussions regarding level playing field issues, one of the priorities identified by USTR for the second negotiating round. While no detailed public information has been released, these discussions are widely understood to address concerns related to non-market practices, industrial subsidies, competitive neutrality, and regulatory conditions affecting North American producers.

Regulatory Cooperation

Potential focus sectors included pharmaceuticals, medical devices, and cosmetics as USTR highlighted regulatory compatibility during the first round.

• Mexico City, July 21–23, 2026

The third round of talks took place after Washington’s July 1 decision to not renew USMCA for another 16 years, leaving the agreement to slip into an annual review process. Although negotiations have thus far been limited to the United States and Mexico, on the eve of his travels to Mexico City, Greer told the Senate Finance Committee, “I would love to have by the end of the year at least some arrangements—one with Canada, one with Mexico.” At the same hearing, the trade representative indicated that a path forward on USMCA requires Mexico to work with the White House on matters that fall outside trade issues, right down to compliance with a 1944 water-sharing agreement.  

This round of talks also unfolded alongside new U.S. tariff announcements. While in Mexico City, Greer unveiled Section 301 tariffs affecting 60 countries. Mexico was included, but goods covered under USMCA remain exempt, leaving it with the largest relative tariff advantage of any country, as tracked in a Financial Times report. 

Prior to the third round, USTR outlined the following areas as key issues for the talks:  

• Automobiles
• Steel and aluminum
• Economic Security
• Labor  
• Agriculture
• Electronic Payment Services 

Automotive Rules of Origin

The United States is seeking to increase the U.S. content requirement for vehicles qualifying for USMCA preferential treatment. In the first round of joint review talks, Washington proposed requiring 50 percent of the value of North American-built vehicles to originate in the United States. This would come on top of USMCA’s existing regional value content requirement, which already raised the threshold to 75 percent, up from 62.5 percent under NAFTA. The proposal reflects the Trump administration’s objective of reducing the U.S. goods trade deficit with Mexico, which reached a record $196.9 billion in 2025, up 15 percent from 2024.  

The proposed 50 percent U.S.-specific content requirement emerged as one of the principal sticking points in the negotiations, with Mexican officials expressing reservations about the proposal. Moreover, Mexico’s Business Coordinating Council (CCE), which represents the private sector in the talks, argued that the requirements should be defined as regional content. CCE president José Medina Mora noted that requiring a fixed share of U.S.-made content would depart from USMCA’s current standards. 

Steel and Aluminum

In June 2025, the Trump administration used Section 232 of the 1962 Trade Expansion Act to argue that increasing tariffs on steel and aluminum imports from 25 percent to 50 percent amounted to a national security imperative. After the talks, Ebrard described the conversations on steel, aluminum, and the substitution of imports from Asia as “constructive.”  

While no specific agreements were announced, Bloomberg reports that, per unnamed sources, Washington asked Mexico to impose 232-style tariffs on steel and aluminum originating outside North America in an effort to create a barrier against Chinese goods. Diego Marroquín, a fellow at the Center for Strategic and International Studies argues that, should Mexico comply, “it would be the closest thing yet to a shared North American posture toward China.”   

Economic Security

Similarly, China is a critical issue in terms of economic security, with discussions focused on export controls and regional supply chains as part of the U.S. administration’s efforts to increase domestic automotive production, replace Asian components in North American supply chains, and reduce the trade deficit with Mexico. For example, ahead of the round, USTR highlighted that Mexico had updated its export control measures for dual-use goods, meaning software and technology that can be used for civilian and military purposes.  

Labor and Agriculture

Labor and agriculture were among the priority areas reviewed during the third negotiating round and were subsequently discussed by Greer and President Claudia Sheinbaum following negotiations. Neither government announced outcomes in either area.  

However, the U.S. private sector has pushed for reforms to strengthen USMCA’s Rapid Response Labor Mechanism, which serves as a framework for the Unites States and Canada to investigate labor right violations in Mexico. In contrast, the Mexican private sector has argued against the unilateral nature of the measure.

On agriculture, Mexico rejected a proposal to restrict Mexican products from entering the U.S. market during its growing season, a “seasonality” rule that would have limited competition with domestic farmers during harvest months. Per reports, Mexican negotiators argued this ran against the logic of free trade and that goods should be able to reach consumers as soon as they are ready. In addition, negotiators reported progress on aligning food-safety, health, and inspection standards between the two countries. 

Electronic Payment Services

Introduced as a new negotiating topic during Round 3, the issue was referenced in the post-talk joint U.S.–Mexico statement as one of the areas reviewed by Greer and Sheinbaum, though no outcomes have been published. However, an indication of issues at stake can be found in Washington’s 2026 National Trade Estimate Report, which indicates that Mexican policy has created hurdles for U.S. firms when it comes to competition, providing services such as fraud protection, and approval of cloud-based tools used by these firms.  

Carin Zissis contributed to this content.