The United States–Mexico–Canada Agreement (USMCA) is approaching a critical moment. Under its terms, the trade pact – which governs one of the world's largest economic regions – is subject to a formal six-year review in July 2026, where members must agree on its continuation or renegotiation.
While the agreement itself is not set to expire immediately, the upcoming review is already shaping trade policy across North America and current signals suggest that talks are unlikely to conclude quickly.
Negotiations are already slipping past deadlines
US Trade Representative Jamieson Greer has warned that efforts to "rebalance" the agreement will likely extend beyond the July 1 deadline, with unresolved issues still on the table.
This reflects deeper tensions between the three partners. The US has expressed dissatisfaction with parts of the deal, particularly the rising number of imports of vehicles from Mexico and continued flows of steel and aluminum from both partners.
At the same time, negotiations are progressing unevenly. Talks between the US and Mexico are reportedly more advanced, while discussions with Canada remain more challenging, highlighting diverging priorities across the bloc.
The review is unlikely to produce a clean or immediate outcome. Instead, businesses should expect a prolonged period of negotiation and uncertainty, with potential interim measures or partial agreements.
Automotive rules of origin remain a key battleground
One of the central issues in the USMCA review is automotive rules of origin, which are the requirements that determine whether a vehicle qualifies for preferential tariff treatment. The US has raised concerns about a surge in imports from Mexico, particularly in the automotive sector, suggesting that current rules may not be sufficiently enforcing regional production.
Changes to rules of origin could have significant implications for manufacturers, particularly those relying on complex cross-border supply chains. Even small adjustments to content thresholds or calculation methods could affect eligibility for tariff preferences and increase compliance complexity.
Nearshoring is reshaping the agreement's priorities
Since the USMCA came into force in 2020, relocating supply chains closer to North America with nearshoring has become a major strategic focus.
Mexico, in particular, has positioned itself as a key manufacturing hub, aligning more closely with US priorities and even introducing tariffs on non-regional imports to support North American supply chains.
The USMCA review is about supply-chain strategy. Future provisions may further incentivise regional sourcing, making it more important for companies to demonstrate North American content and traceability.
Tariffs and trade tensions are complicating talks
The current negotiations are taking place against a backdrop of ongoing tariff disputes and broader trade tensions. The US has imposed tariffs on sectors such as steel, aluminum and automobiles, while Canada and Mexico have responded with countermeasures. These disputes are now feeding directly into USMCA discussions, with partners seeking relief from tariffs as part of any agreement.
Trade agreements and tariff policy are increasingly intertwined. Companies cannot view USMCA in isolation, as sector-specific tariffs and broader trade measures will continue to influence market access and costs.
Rerouting and compliance risks are under scrutiny
Another emerging issue is the rerouting of goods to avoid tariffs, particularly as companies adapt to shifting trade rules and geopolitical pressures.
Authorities are increasingly focused on ensuring that goods genuinely meet origin requirements, rather than simply being routed through compliant countries. This means enforcement of rules of origin and supply chain transparency. Companies may face increased scrutiny on documentation, supplier declarations and manufacturing processes.
What happens if no agreement is reached?
Failure to reach agreement at the July review does not immediately terminate USMCA. The agreement can continue, but with the possibility of annual reviews and ongoing uncertainty.
At the same time, US officials have signalled that more drastic options , including withdrawal or a shift to bilateral agreements, remain on the table if key concerns are not addressed.
In a system where trade policy, geopolitics and industrial strategy are increasingly intertwined, the outcome of the USMCA review will have lasting implications for how goods move across North America. Companies that invest in visibility, origin management and flexible supply chain strategies will be best positioned to navigate what comes next.