U.S. and Mexican trade negotiators are set to begin a third round of bilateral talks on Tuesday, focusing on revisions to the North American trade agreement. This meeting excludes Canada, which is currently facing a new set of punitive duties from the Trump administration.
The talks, scheduled to last three days, mark the first formal discussions on changes to the U.S.-Mexico-Canada Agreement (USMCA) since the Trump administration declined to extend the six-year-old regional trade pact on July 1. This decision initiated a 10-year clock for the agreement's potential termination unless improvements are agreed upon by all three nations. Industry groups have urged the administration to preserve the trilateral structure and largely tariff-free trade, which supports nearly $1.6 trillion in annual commerce.
Mexico's ambassador to the U.S., Roberto Lazzeri, expressed optimism on Friday, stating that Mexico anticipates reaching a new agreement by the end of the year, a timeline he believes the U.S. and Canada also share. "Every moment that we’re losing, I think we are losing competitiveness, market share and investment, so it’s in the best interest of all three of us to get to a position of resolution soon," Lazzeri said. He added that Mexico aligns with the Trump administration's objective of increasing North American manufacturing and seeks relief from U.S. tariffs on Mexican autos and steel.
The negotiations commence a day after the U.S. announced new tariffs on nearly $20 billion worth of Canadian goods, a response to retaliatory tariffs imposed by Canada on U.S. autos, steel, aluminum, liquor, and dairy products. This action has further strained relations, leaving Canada largely sidelined in the USMCA discussions, as U.S. Trade Representative Jamieson Greer indicated minimal progress on concessions from Canada.
Canadian Prime Minister Mark Carney stated that his government has presented comprehensive proposals to resolve trade disputes with Washington, asserting that past U.S. tariffs contravened the North American trade pact.
Greer commended Mexico for its lack of retaliation against U.S. tariffs and its "pragmatic" negotiation approach. This includes efforts to align Mexico's export controls with those of the U.S., bolster intellectual property protections, and curb the export of avocados from illegally deforested land.
Focus on Autos and Economic Security
The discussions in Mexico City are slated to delve into technical aspects of bilateral trade concerning autos, steel, aluminum, agriculture, and labor. A key agenda item is "economic security," a term used by the USTR to describe the goal of enhancing regional trade protections to prevent countries like China from using Mexico and Canada as conduits to the U.S. market under preferential terms.
Sources familiar with the negotiations indicate that the U.S. desires its North American partners to implement similar trade barriers against non-regional goods, particularly in sectors such as vehicles, auto parts, steel, and aluminum. The growing presence of Chinese automakers in Mexico's market is a potential point of contention. Reports show a significant increase in Chinese car sales in Mexico during the first half of 2026, despite existing tariffs.
During prior USMCA talks with Mexico in May, the USTR proposed a requirement that 50% of the value of North American-built vehicles originate in the United States. This proposal represents a substantial shift from current regulations and poses a challenge for automakers with integrated regional supply chains.
Greer highlighted that the growing trade deficit with Mexico, which has benefited from supply chain shifts away from China, remains a primary concern for President Trump regarding the future of USMCA. Data from the U.S. Census Bureau indicates this deficit increased by 17% to $197 billion in 2025.