Mexico's Economy Minister Marcelo Ebrard has expressed confidence that Mexico can reach an agreement with the United States regarding the USMCA's future, potentially securing a 10-year extension and tariff relief by the July 1, 2026, review deadline. This comes after President Donald Trump indicated he was "not looking to renew" the USMCA for its full 16-year term. Ebrard, however, maintains that a full termination of the treaty is unlikely due to its perceived benefits for the U.S. and that Mexico has a contingency plan to accept a 10-year continuation with periodic reviews if the 16-year extension is not agreed upon. Canada also supports extending the trilateral pact.
Ebrard's optimism stems from the understanding that the USMCA facilitates over $2 trillion in annual trade within North America, with 85% of Mexico's exports to the U.S. currently entering tariff-free. This trade relationship, worth $872.8 billion in 2025, makes Mexico's exports to the U.S. significantly "cheaper" than those from other global competitors. The minister emphasized that Mexico is prepared for the upcoming review talks, which are set to begin on July 1 with virtual meetings, followed by formal drafting around July 20, and a third bilateral round in Mexico City for detailed discussions.
Despite the positive outlook from Mexico, the trade relationship has faced challenges, including U.S. Section 232 tariffs of 50% on steel and aluminum and 25% on automotive goods not meeting USMCA content thresholds. These tariffs have already impacted Mexico's economy, leading to a 36.6% decrease in steel exports to the U.S. in 2025 and a 5.1% decline in automotive exports year-over-year from January to April 2026, totaling $48.638 billion. This has raised concerns about up to 350,000 manufacturing jobs in the automotive sector. Mexico's private sector, representing 84% of surveyed companies, strongly supports maintaining the USMCA's existing rules of origin, free market access, and dispute resolution mechanisms.
Analysts have warned that a 10-year extension with annual reviews could introduce prolonged regulatory uncertainty for North American supply chains. However, Mexican exports could reach $700 billion in 2026 if preferential access to the U.S. market is maintained. Former U.S. Trade Representative Ron Kirk has cautioned that tariffs act as taxes on American businesses and families, highlighting the importance of the integrated North American economy and suggesting that China is the true economic competitor.
President Trump's initial strong remarks about not renewing the USMCA were later softened, suggesting that his administration might seek modifications to the agreement to better serve U.S. interests rather than a complete withdrawal. Mexico's Minister Ebrard believes that even if the U.S. does not agree to the 16-year extension, a 10-year continuation with periodic reviews is a likely outcome, ruling out a full cancellation of the treaty.
