North America Trade Deal Faces Yearly Review

MEXICO · ANALYSIS

The USMCA review is the six-year check on the trade pact linking the United States, Canada and Mexico, and on 1 July 2026 Washington declined to renew it. The pact stays in force until 1 July 2036, but yearly reviews now hang over US autos, steel and farm trade.

The USMCA is the agreement that governs most trade across North America, and it is called CUSMA in Canada and T-MEC in Mexico. This analysis explains the review mechanism, the deadlines, the tariff dispute and the choices ahead, following the USA & Canada Intelligence Brief of 2 November 2026.

What the USMCA Is and How the Review Works

The United States–Mexico–Canada Agreement replaced NAFTA, the earlier North American trade pact. It has a 16-year term and expires on 1 July 2036 unless extended, according to law-firm analyses of Article 34.7 by DLA Piper and White & Case.

Article 34.7 requires a joint review after six years. On 1 July 2026 the three parties met virtually for that review.

The US Trade Representative, the US office that negotiates trade deals, issued a statement the same day. It said: “The United States did not agree to renew the USMCA in its current form.”

The statement adds that the agreement remains in force while Washington addresses perceived shortcomings and trade deficits with Mexico and Canada. Canada and Mexico backed a 16-year extension, according to a White & Case summary.

Under Article 34.7(4), joint reviews now take place every year until all three parties confirm an extension or the agreement expires in 2036, DLA Piper explains. Article 34.6 also lets any party withdraw on six months’ notice.

Marcelo Ebrard, Mexico’s Economy Secretary, said the annual reviews would run for the next 10 years, El Financiero reported on 20 October.

Canada and Mexico on Separate Tracks

Canada: Talks Broke Down in August

Jamieson Greer, the US Trade Representative, told Congress that the review would depend on resolving three Canadian issues, according to CTV and Global News. They were dairy access for US products, provincial bans on US alcohol, and complaints about Canada’s Online Streaming Act and Online News Act.

Talks between Washington and Ottawa broke down around 21 August 2026. The US then imposed 50% tariffs on about US$20 billion of Canadian goods from 22 August, Al Jazeera reported.

Canada retaliated dollar-for-dollar from 8 September 2026, CNBC reported. The counter-tariffs, announced on 25 August on about C$27.6bn of US goods, are 15%, 25% and 50%, with 50% applying to steel and aluminium products, dairy powders, whey, casein and concentrates, pulp and paper, electronics, clothing and sports equipment, and 25% to wood and lumber, household steel and aluminium articles, appliance parts, carpets and cheese.

Canada’s counter-tariffs also cover US dairy products. Separate Section 232 tariffs, a US trade measure used on autos and metals, remain in place.

The rates are 25% on covered autos and parts, 25% on medium and heavy trucks, 10% on buses and 50% on steel, aluminium and copper products. Trump said a concept for a very good deal with Canada exists and that relief on steel and autos is under discussion, ABC News reported, with no details announced.

ABC said Carney considered a deal before the 3 November US midterm elections unlikely. Negotiators are to keep working in the coming weeks.

Mexico: A Bilateral Negotiation

Mexico negotiates with the US bilaterally. The July statement by Greer and Ebrard listed economic security, labour, agriculture, electronic payment services, steel and aluminium, and autos.

It stresses stopping free-riding by non-parties, a phrase that appears aimed at China though the statement does not say so.A fourth round was set for Washington in September and was postponed on 23 September, reportedly over scheduling conflicts including a Xi Jinping state visit and the G20. On autos, the AS/COA tracker says the US proposed raising regional content from 75% to 82%, with 50% sourced in the US, and Mexico resisted.

Press summaries say Mexico wants Section 232 cuts before conceding elsewhere. As of 28–29 October there was no agreement on Section 232 tariffs, and President Claudia Sheinbaum said many US-identified non-tariff barriers have been resolved, Xinhua reported.

Ebrard cited 115 negotiating meetings and said Trump’s threats against Mexican cartels are handled in another arena, El Financiero reported.

Who Is Who and What Is at Stake

• Donald Trump, US President: says a concept for a deal with Canada exists.
• Jamieson Greer, US Trade Representative: leads the US side and declined to renew the pact in its current form.
• Mark Carney, Canada’s Prime Minister: calls the latest talks constructive but rejected the US terms in August.
• Dominic LeBlanc, Canada’s minister responsible for Canada–US trade: has said there is no indication the US is considering withdrawal, according to CTV.
• Claudia Sheinbaum, Mexico’s President: says the talks involve no surrender of sovereignty.
• Marcelo Ebrard, Mexico’s Economy Secretary: leads Mexico’s talks and aims to conclude by the end of 2026.

For US manufacturers, the exposure is mainly in autos and metals. Stricter content rules would raise costs for US assemblers that source parts in Mexico and Canada, and 50% steel tariffs raise their input costs.

For US farmers, the picture is mixed. US dairy producers want access to Canada, yet US seafood and dairy sellers face Canadian retaliation.

For consumers, tariffs on goods bound for the US can pass through to shop prices. This analysis offers no estimate because the research found no sourced one.

For Mexico, the stakes are large because the US took 84.8% of its non-oil exports in January–September, according to INEGI, the national statistics office, via Expansión on 27 October. INEGI also reported September exports of US$77.8 billion, up 37.9% on a year earlier, and a monthly deficit of US$606 million.

Banxico, the central bank led by Governor Victoria Rodríguez Ceja, held its rate at 6.50% on 24 September, according to reports of its decision. Headline inflation was 3.42% in the first half of September, so trade uncertainty meets a central bank that has paused its easing.

Scenarios for 2027 and Beyond

These are scenarios, not forecasts. In the first, the parties muddle through: annual reviews continue and the agreement stays in force to 2036, which is the legal default.

In the second, bilateral side deals stabilise the situation. A US–Mexico package on autos and metals could come by the end of 2026, and a US–Canada deal on tariffs and dairy could follow, making a later three-way extension easier.

In the third, relations escalate and Washington issues a withdrawal notice under Article 34.6, which takes six months to bite. There is no sign of this so far.

What could tip a success is a signed text on steel and autos tariffs that both Ottawa and Mexico City can defend at home. What could tip a failure is a new dispute over auto content rules, dairy or digital laws that revives tariff threats.

What It Means for You

If you buy or build vehicles in the United States, check how much of your supply chain runs through Mexico and Canada. Content rules reportedly under discussion, such as 50% US-made parts, would change sourcing costs even if tariffs fall.

If you import Canadian goods on the US tariff list, the 50% tariff in force since 22 August applies to them. Contracts with Mexican suppliers carry less direct tariff risk today, since Ebrard and Mexico’s Economy Ministry say more than 80% of Mexican exports to the US, those that comply with USMCA rules, enter tariff-free, but they depend on the outcome of the interim talks.

Investors should treat 1 July 2036 as the legal horizon and the yearly reviews as the real calendar. Mexican assets also react to Banxico decisions and to US trade headlines.

What Is Not Known

• The date of the next annual review, likely around 1 July 2027 but not officially confirmed.
• The date and venue of the fourth US–Mexico round.
• Whether any text of a US–Canada deal exists, and whether Canadian steel and auto tariffs will be cut.
• The exact Canadian retaliation rates and the exact US content demand, which come from secondary sources only.
• The accuracy of the sharp rises in Mexico’s trade figures, which we have not checked against the INEGI bulletin.
• The result of the US midterm elections, due on 3 November.

What to Watch

• 3 November 2026: US midterm elections; Xinhua reports Mexico wants to assess an interim deal around then.
• Coming weeks: US–Canada negotiators resume work on tariffs, steel and autos, according to ABC News.
• November–December 2026: Banxico rate decisions; exact dates are unconfirmed.
• 12 January 2027, 11:59 p.m. EST: deadline for written comments and hearing requests on the 2027 review, per a summary of the USTR notice (dockets USTR-2026-0595 and USTR-2026-0596).

Related reading: Puerto Vallarta Travel Guide for Expats and Nomads 2026; Mexico Continent Role, Weight and Alliances in Latin America; Who Borders Mexico? US, Guatemala, Belize and USMCA Trade; more from Mexico.

Frequently Asked Questions

What is the USMCA review?

It is the mandatory six-year joint review of the United States–Mexico–Canada Agreement under Article 34.7. The three parties held it virtually on 1 July 2026.

Did the United States cancel the USMCA?

No. The US declined to renew it in its current form, but the agreement stays in force until 1 July 2036 and is now reviewed every year.

Can a country leave the USMCA?

Yes. Article 34.6 lets any party withdraw on six months’ notice, and there is no sign the US is considering it.

What tariffs does Canada face?

The US has applied 50% tariffs to about US$20 billion of Canadian goods since 22 August 2026. Section 232 tariffs of 25% on covered autos and 50% on steel and aluminium also remain, according to trackers.

How is Mexico’s position different from Canada’s?

Mexico is negotiating bilaterally with the US and has not faced the 50% tariff on a broad list of goods. Ebrard aims to conclude talks by the end of 2026.

What is the next deadline?

The USTR deadline for written comments on the 2027 review is 12 January 2027 at 11:59 p.m. EST.