US and Mexico begin first formal USMCA talks since Washington declined to extend the trade pact on July 1
A drone view shows trucks crossing into the United States via the Zaragoza-Ysleta border bridge, in Ciudad Juarez, Mexico, April 2, 2025. REUTERS
US and Mexican trade negotiators will meet for a third round of bilateral talks on Tuesday to try to push forward with revising the North American trade agreement, just as President Donald Trump slaps Canada with a new set of punitive duties.
The talks, which exclude Canada, are set to run for three days and are the first formal discussions on changes to the US-Mexico-Canada Agreement since the Trump administration declined to extend the six-year-old regional trade pact on July 1.
The move started a clock to wind down USMCA within 10 years unless the three countries can agree on improvements. Industry groups have urged Trump to keep intact the trilateral structure and largely tariff-free access that underpins nearly $1.6 trillion in annual trade.
US Trade Representative Jamieson Greer, who is due to join the talks on Wednesday, said that Trump’s “number one goal” for USMCA was to see lower U.S. trade deficits with Canada and Mexico and more manufacturing reshored to the US.
The US goods trade deficit with Mexico grew last year by $28 billion, or 17%, to $197 billion, according to data from the US Census Bureau, which comes under the Commerce Department. The US trade gap with Canada fell by $12.9 billion or 21% last year to $48.3 billion.
“We want the outcomes to make sense. We want to have more auto manufacturing here, and we’re seeing it,” Greer told CNBC on Tuesday, citing some moves by automakers to open new assembly capacity in the US, including Toyota’s expansion of a Texas plant to build trucks now assembled in Mexico.
“So that’s the outcome that he wants,” Greer added. “I think also if we can have an arrangement with Mexico, with Canada, that we are trying to emphasize Canadian, Mexican, US content in goods traded in North America, that’s a good outcome because that helps get supply chains back here in North America.”
During bilateral USMCA talks with Mexico in May, USTR proposed requiring that 50% of the value of North American-built vehicles originate in the United States, a significant departure from current rules and a difficult adjustment for automakers with highly integrated regional supply chains.
Year-end goal
Mexico’s new ambassador to the US, Roberto Lazzeri, said on Friday that Mexico was expecting to reach a new deal by the end of the year, and that he believes the US. and Canada are aiming for the same goal.
“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,” said Lazzeri, a former investment banker and finance ministry official.
He added that Mexico shares the Trump administration’s goal of bringing more manufacturing to North America, including to the US Another key goal for Mexico is to win some relief from Trump’s 25% national security tariffs on Mexican autos and 50% on its steel and aluminum products, duties also applied to Canada.
Tariff setback for Canada
The talks come a day after the Trump administration announced new tariffs on nearly $20 billion worth of Canadian goods over Ottawa’s retaliatory tariffs on US autos, steel, aluminum and liquor and its high dairy tariffs.
That move deepens a rift that has kept Canada largely sidelined in the USMCA negotiations, as Greer has decried little movement towards concessions.
Canadian Prime Minister Mark Carney said in a statement that his government had made comprehensive proposals to resolve trade disputes with Washington, adding that Trump’s past tariffs violated the North American trade pact.
Read More: US imposes new 50% tariffs on $20 billion worth of Canadian products
Greer has meanwhile lauded Mexico for its lack of retaliation to US tariffs and “pragmatic” approach to negotiations that include work to align Mexico’s export controls with those of the US, steps to protect intellectual property rights and moving to curb the export of avocados grown on illegally deforested land.
Autos and economic security
The talks in Mexico City will dig into technical details of US-Mexico trade in autos, steel, aluminum, agriculture and labor, according to Greer’s office.
The discussions will also focus on “economic security,” USTR’s term for raising regional trade protections to keep China and other Asian countries from using Mexico and Canada to access the lucrative US market on preferential terms.
China’s growing footprint in Mexico’s car market represents a potential irritant in the talks. Reuters on Monday reported that new distribution figures showed Chinese car sales rose 30% in the first half of 2026, despite 50% tariffs imposed in January, with Chinese brands raising their market share to 17% from 14% a year earlier.
People familiar with the talks have said that the US wants its North American partners to erect similar trade barriers to non-regional goods, including vehicles, auto parts, steel, aluminum and other components.
