The USMCA Wasn’t Renewed. It Also Didn’t Expire. Here’s What Changed for Mexican Exporters

The most widely misreported fact in North American trade this year is that the USMCA expired. It did not.

What happened on 1 July was narrower and, for Mexican exporters, more manageable than the coverage implied — though it leaves the agreement in a condition it has never been in before: operating normally while its long-term future is renegotiated round by round. The substantive fight has meanwhile moved to a single figure in the automotive rules, and that one is genuinely unresolved.

The USMCA Free Trade Commission met virtually that day, as Article 34.7.2 requires on the agreement's sixth anniversary. Afterwards, US Trade Representative Jamieson Greer issued a statement saying the United States did not agree to renew the USMCA in its current form and that, as a result, the USMCA is not renewed. Washington would continue engaging Mexico and Canada on the agreement's shortcomings and on trade deficits.

The same statement contained the sentence that most coverage dropped: the agreement remains in force pending resolution of those issues or until its termination.

What did not happen

The distinction is legal rather than semantic, and it determines whether Mexican goods still enter the United States on preferential terms. They do.

Under Article 34.7.1 the USMCA runs a 16-year term from entry into force, meaning through 1 July 2036. The agreement has neither lapsed nor expired. What did not occur on 1 July was the optional decision to extend it beyond 2026 — a separate mechanism. All current rights and obligations continue to apply: preferential tariffs, rules of origin, investment protections and dispute settlement.

The practical consequence of declining to extend is that the parties now enter a cycle of annual reviews rather than securing a further 16 years of certainty in one step. That is a meaningful loss of predictability for anyone financing a plant with a 20-year payback. It is not the collapse of the trading relationship.

Mexico and Canada both confirmed support for a 16-year extension, Canada having signalled its position in a letter from Trade Minister Dominic LeBlanc to Greer and Mexican Economy Secretary Marcelo Ebrard on 1 June. The United States was alone in declining.

Where the negotiations actually stand

Formal bilateral talks between Washington and Mexico launched on 28 May, and Washington has chosen to negotiate separately with each partner rather than trilaterally.

The third round ran in Mexico City in the week of 20 July, with Greer meeting both Ebrard and President Claudia Sheinbaum. According to the joint statement issued afterwards, the discussions covered economic security, labor, agriculture, electronic payment services, steel and aluminum and derivative products, and automobiles. Greer and Sheinbaum agreed on the importance of growing North American manufacturing, strengthening regional supply chains and addressing what the statement described as free-riding from non-parties.

A fourth round is set for Washington in early September.

Ebrard characterised the July conversations as constructive, citing advances on steel, aluminum and the substitution of imports from Asia. He has also said the process has crossed off the vast majority of an initial 54-item list of US concerns.

Reuters reported, citing two sources familiar with the matter, that the two sides nonetheless remain far apart on key issues. The autos file is the clearest example. A proposed 50% US-specific content requirement has emerged as a principal sticking point, and Mexico's Business Coordinating Council has argued the threshold should be defined as regional content instead. Its president, José Medina Mora, noted that requiring a fixed share of US-made content would depart from the USMCA's existing standards. Automobiles account for roughly 40% of US imports from Mexico, so the resolution of that single question carries more weight than most of the rest of the agenda combined.

On agriculture, Mexico rejected a proposed seasonality rule that would have restricted Mexican products from entering the US market during the domestic growing season. On labor, the US private sector has pushed to strengthen the Rapid Response Labor Mechanism, while Mexican business has objected to its unilateral character. Neither government has announced outcomes in either area.

Greer told the Senate in July that he hopes to reach interim agreements with Mexico and Canada this year while leaving the more difficult USMCA changes to 2027 — an admission that the process will extend well past the original review date.

The tariff backdrop is separate, and unsettled

Running underneath the USMCA talks is a distinct and unresolved legal fight over tariffs imposed outside the agreement.

The Supreme Court ruled in February that the International Emergency Economic Powers Act does not authorise the president to impose tariffs, invalidating both the reciprocal tariffs and the fentanyl-related duties applied to imports from Mexico, Canada and China. The administration then invoked Section 122 of the Trade Act of 1974 to apply a 10% across-the-board surcharge for 150 days; the Court of International Trade ruled against that measure in May, though the decision is under appeal and collection has continued.

The fiscal consequences are now substantial. The US refunded $33.4 billion in tariffs to businesses in July, pushing total repayments past $100 billion and marking the third consecutive month in which refunds exceeded collections.

Separately, USTR opened Section 301 investigations in March covering a range of trading partners including Mexico — a route that could support new tariffs on different legal footing.

For Mexican exporters, the practical position is that USMCA preferences continue to apply while the tariffs layered on top of them remain subject to litigation.

What to watch

The September round in Washington is the near-term event, and the autos content threshold is the question to watch within it.

Beyond that, the variable that will shape Mexican investment decisions is duration rather than terms. Negotiations extending into 2027, as Greer has signalled, mean a prolonged period in which the rules governing nearly $1.6 trillion in regional trade are settled one year at a time. That uncertainty falls hardest on greenfield projects, which is where Mexico's nearshoring case was supposed to be won.

Demand conditions in the destination market are not helping either: US consumer sentiment and retail sales both declined in July.

The agreement is intact. What is missing is the assurance that it will still look the same in five years.