In July 2026, Mexico, the United States, and Canada will begin the review of the United States-Mexico-Canada Agreement (USMCA), a pivotal process that could extend the deal for another 16 years or lead to prolonged negotiations. This evaluation occurs amid political tensions, with voices from Washington suggesting the U.S. could thrive without the treaty, and aligns with challenges in Mexico's automotive industry, which is seeing export declines and the influx of Chinese vehicles. Business leaders and experts stress the need for regional integration to sustain competitiveness.
The USMCA review, set for July 2026, does not mean an immediate renegotiation but rather an evaluation every six years that allows extending the agreement for another 16 years if consensus is reached among the parties. Otherwise, a period of up to 10 years of annual meetings begins to seek a new understanding. This mechanism, built into the treaty's design, aims to maintain stability in North American integration, despite recent political noise.
From the United States, voices have claimed the country 'could live without the treaty,' while Canada seeks alternatives to counter harder stances. However, economic reality highlights interdependence: decades of intertwined value chains make sudden disintegration unlikely. Business leaders, particularly from the U.S., have lobbied their government on the treaty's strategic importance, alongside governors and legislators who view regional trade as a direct driver of local development.
In this context, Mexico's automotive industry faces significant challenges. Between 2018 and 2024, automotive manufacturing exports grew at 4.9% annually, but in 2025 they fell by 4.2%, dropping from 33% of total manufacturing exports in 2022 to 27% last year. This downward trend underscores the need to redefine the sector, as discussed in a recent meeting with President Claudia Sheinbaum.
External factors exacerbate the situation: China's influence has diversified Mexico's imports, reducing the U.S. share, while Donald Trump's proposals aim for high tariffs on Chinese vehicles and prioritizing U.S. production. Key trends include treating automobiles as strategic assets, the rise of electromobility—shifting value to batteries and software—, stricter regulations on traceability and cybersecurity, and the need to boost domestic competitiveness through reliable energy and rule of law.
Mexico must prioritize the automotive sector in the USMCA review, signaling certainty to investors. The previous review under Trump, which resulted in a renewed treaty despite tensions, suggests economic substance will prevail over political noise. Strengthening North American integration could position the region as a globally competitive bloc.
