USMCA After the 2026 Review: What Manufacturers Need to Prepare for Next
9 min Read
- Insider
- Manufacturing in Mexico
- Politics & Regulations
Key Takeaways
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On July 1, 2026, the United States declined to join Canada and Mexico in extending the USMCA. The agreement did not expire, and its tariff schedules, rules of origin and dispute procedures stayed in place.
What changed is not the treaty. It is the tariff environment around it, and that environment moved more in the first half of 2026 than the agreement itself has since 2020.
This page is the operational companion to what actually changed at the review. That one answers what happened. This one answers what to do about it.
Current as of September 12, 2026. Tariff treatment is product-specific and can change through subsequent trade actions.
What happened on July 1
Nothing inside the agreement changed that day.
Article 34.7 ends the USMCA 16 years after entry into force unless all three governments confirm in writing that they wish to continue for a new 16-year term. On July 1 the United States did not confirm. USTR’s statement said the United States did not agree to renew the agreement in its current form, and that the agreement remains in force while discussions continue.
Declining to extend did not shorten anything. Under Article 34.7 the term runs to July 1, 2036 unless the parties extend it, and they can do that at any point before expiry rather than waiting for another six-year milestone. Separately, Article 34.6 allows any party to withdraw on six months’ written notice. As of September 12, no party has announced a withdrawal notice.
What the decision produced is an annual review cycle for the remainder of the term. That is the legal clock. It is a different thing from where the negotiations sit.
Why qualification matters beyond the ordinary duty
The most useful fact on this page is not about the review at all.
A Section 301 action took effect on July 24, 2026, imposing an additional 10 percent tariff on covered products of Mexico. The implementing language is explicit: that additional duty does not apply to products of Mexico entered free of duty under the USMCA.
That matters because USMCA qualification can affect more than the ordinary customs duty. Under the current tariff regime it can also shield a qualifying Mexican good from an additional tariff imposed outside the agreement itself. The tariff environment has made proof of origin substantially more valuable than it was before the 2025 and 2026 tariff changes.
The reverse is also worth stating plainly, and carefully. A product entered without a USMCA claim can face the ordinary Column 1 duty and the additional 10 percent, unless another product or sector-specific exemption or tariff treatment applies. The Section 301 notice carries a substantial exemption structure. This is not a two-line calculation.
10%
Additional Section 301 tariff on covered Mexican products, with an explicit exemption for goods entered free of duty under USMCA
80.2%
Share of US import value from Canada and Mexico combined claiming a USMCA exemption, July 2026
$13.5B
Manufacturing FDI received by Mexico in the first half of 2026, up 9.3 percent
The tariff stack you actually have to evaluate
There is no single headline rate for a Mexican import, and anyone who gives you one is selling a simplification.
Four separate questions determine what a product pays, and they have to be answered in order:
The ordinary duty for the tariff classification
Everything starts with the HTS code. Get this wrong and every answer below it is wrong too.
Whether the product satisfies its product-specific rule of origin
There is no single North American content percentage that applies across the board. The rule follows the classification, which is why two goods off the same line can reach different answers.
Whether the Section 301 action reaches it
Goods entered free of duty under USMCA are exempt. Articles and parts subject to specified Section 232 tariff provisions are also exempt from this Section 301 action, which prevents the two additional duties from stacking in those cases.
Whether a separate product-specific measure applies
Section 232 on metals, the automotive actions and other trade remedies operate under separate rules. A good can qualify under USMCA and still face one of those measures, although USMCA status can affect how some of those measures apply.
On that last point, one correction to how Section 232 is usually described. USMCA qualification does not automatically eliminate Section 232 tariffs, and the old shorthand that the duty applies only to steel and aluminum content is no longer accurate. Since April 6, 2026, the duties on covered steel, aluminum and copper articles and derivatives are generally assessed on the full customs value of the product rather than on metal content. A June 2026 update then created special treatment for certain covered aluminum and steel products of Canada and Mexico that qualify for USMCA preference, under which a 25 percent duty can apply to non-US content rather than full value, subject to a minimum effective duty of 15 percent.
You do not need to know every metal tariff to run an operation. You need to know that classification, origin and the separate tariff regimes have to be analyzed together, for your product, rather than reasoned about from the country on the carton.
What is actually on the negotiating table
We are not going to predict the outcome. USTR has published what negotiators are discussing, which is more useful than a forecast.
Across the bilateral rounds held so far, the published agendas have covered automotive rules of origin, industrial rules of origin, steel and aluminum and derivative products, economic security, labor, agriculture, environment, and electronic payment services. Critical minerals cooperation has also been referenced separately.
Where that lands is genuinely open. What it tells a manufacturer is which parts of the agreement are under active discussion, and rules of origin are on that list in two forms. If your qualification currently clears its threshold by a narrow margin, that is worth knowing now rather than later.
On the stakeholder side, USTR received 1,514 public comments ahead of the review. Many supported extending the agreement, and virtually all called for some form of improvement. Support for USMCA and support for the status quo are not the same position.
What the data say companies are doing
Manufacturers did not wait for the review to resolve.
In July 2026, 80.2 percent of US import value from Canada and Mexico combined claimed a USMCA exemption, according to Penn Wharton Budget Model analysis of USITC data. That share rose sharply for both countries once the cost of falling outside the agreement increased.
It is worth being precise about what that number does and does not show. It shows behavior changing quickly once qualifying was worth more. It does not tell us the mechanism at any individual importer. Some companies may have changed sourcing. Others may have documented and claimed a preference that previously was not worth the administrative effort. Both produce the same statistic and imply very different amounts of work.
What you need to know about your own product
Every question on this page resolves at the product level, not the country level.
The sequence is the same whether you are already operating in Mexico or still evaluating it. Confirm the tariff classification. Identify the product-specific rule of origin that follows from it. Establish what evidence your suppliers can actually produce. Determine whether the product qualifies. Then check the separate tariff exposure that sits outside USMCA. Only then do you have a landed cost you can plan against.
If you already produce in Mexico, your immediate exposure did not change because the agreement was not extended on July 1. What matters is whether your products qualify under the rules in force, whether you are actually claiming preference, and whether you can substantiate that claim on demand.
If you are still deciding, design the bill of materials with the applicable rule in mind rather than assuming production in Mexico is enough. The site decision and the origin decision are separate questions, and the origin decision can change landed cost even when the factory location does not. Where you need certainty on US treatment, US Customs and Border Protection issues binding advance rulings.
Investment did not stop while the review played out
The clearest signal about Mexico in 2026 is where money actually went.
Mexico received a record $34.968 billion of foreign direct investment in the first half of 2026. Manufacturing accounted for $13.482 billion of it, up 9.3 percent from the comparable 2025 period and 38.6 percent of the total. Full-year 2025 was also a record at $40.871 billion.
That record needs context, because the composition changes what it proves. Reinvested earnings accounted for 88.5 percent of first-half 2026 FDI, while new investment accounted for 7.8 percent. The number is therefore stronger evidence of continued commitment by established foreign investors than of a wave of new greenfield entrants.
The constraint that did not change
Tariffs move faster than workforces do.
The US labor constraint has not gone away. The Bureau of Labor Statistics counted 580,000 manufacturing job openings in July 2026. Separately, the Manufacturing Institute and Deloitte estimate that US manufacturers could need as many as 3.8 million additional workers through 2033, with up to 1.9 million positions remaining unfilled if workforce challenges are not addressed. That second figure is a conditional projection rather than a forecast, and it is worth reading as one.
That does not mean labor is abundant everywhere in Mexico. Workforce availability varies substantially by region, skill and industry, and the honest version of this argument is narrower than the usual one. It means labor market capacity remains one of the variables worth evaluating alongside tariffs, logistics and operating cost when you compare North American locations.
What remains unresolved
Being straight about the open questions is more useful than projecting confidence.
No 16-year extension has been agreed
Negotiations continue. The parties can extend at any time before expiry, and the annual review cycle runs in the meantime.
The negotiating rounds are ongoing
As of September 12, the latest published USTR bilateral-round readout is the July 23 statement, which scheduled a fourth round in Washington for September.
Trade actions are still moving
The forced-labor Section 301 investigations produced final tariff actions in July. A separate Section 301 investigation into structural excess capacity and production in manufacturing sectors, which includes Mexico, remains unresolved as of September 12.
Labor enforcement stays active
The Rapid Response Labor Mechanism has been used dozens of times and remains an active facility-level enforcement tool, with further cases resolved during 2026.
Where Tetakawi fits in the due diligence
If you are evaluating a Mexico operation, the customs analysis belongs before you design the supply chain around it.
As part of our Mexico due diligence, Tetakawi performs customs and trade analysis around the proposed operation. We work through the finished product, major inputs, source countries, tariff classifications and expected shipping flows to understand how the supply chain is likely to be treated on both sides of the border.
That analysis can include the applicable USMCA rule of origin, the likely qualification path, Section 301 and Section 232 exposure, landed-cost scenarios, and the Mexican import, export and inventory control structure the operation will need to support.
For companies that move forward, we provide access to the Mexican operating entity and trade program, along with import and export administration, at our Manufacturing Campuses. The analysis is not separated from the operation that eventually has to support it.
There is still a boundary. The US importer of record retains its responsibilities to CBP, and where a company needs a formal legal position or certainty from Customs, its broker, trade counsel or a CBP binding ruling may be appropriate.
Our role is to make sure those decisions are made with the actual product, bill of materials, sourcing plan and operating model in front of them, before the factory is built around assumptions that later prove expensive.
Common questions about USMCA after the review
Did the USMCA expire in 2026?
No. The July 1 decision not to extend did not shorten the agreement’s term. Under Article 34.7 it runs to July 1, 2036 unless the parties extend it, and Article 34.6 separately allows a party to withdraw on six months’ written notice. No such notice has been given.
What tariffs apply to goods manufactured in Mexico today?
It depends on the product. The starting point is the ordinary duty for its tariff classification. Goods entered free of duty under USMCA are exempt from the 10 percent Section 301 action that took effect July 24, 2026. Separate measures including Section 232 on metals and the automotive actions apply on their own terms.
Does USMCA qualification make a product duty-free?
Not automatically, and this is the most expensive misunderstanding in the category. Qualification can eliminate the ordinary duty under the agreement and can exempt the good from the Section 301 action, but separate trade measures may still apply depending on classification.
Should we wait for the negotiations to conclude before expanding into Mexico?
The agreement is in force while negotiations continue. One of the most important questions you can resolve now is whether your specific products qualify and what tariff exposure remains if they do not. That lets you make the timing decision from an actual landed-cost model rather than from the headlines.
Before you commit to Mexico
Test the actual product
Send us your finished product, major inputs, source countries, classifications and shipping flows. As part of due diligence we can analyze the applicable customs and USMCA requirements, identify potential tariff exposure, model the landed-cost impact, and determine what the Mexican operation would need to support the supply chain.
