Photo: Fejuz / Unsplash
On July 1, 2026, the United States-Mexico-Canada Agreement (USMCA) faces its first formal joint review, a built-in mechanism that will determine whether the trade deal that replaced NAFTA in 2020 survives for another 16 years or begins a decade-long countdown toward expiration.
For the roughly 1.6 million Americans living in Mexico and the millions more who visit each year, the outcome of this USMCA review in 2026 carries real consequences. Changes to trade rules could affect everything from the price of imported goods on supermarket shelves to the cost of shipping personal belongings across the border. If you run a small business that depends on cross-border commerce, or you receive a pension denominated in US dollars while paying rent in pesos, the renegotiation could reshape the economic landscape you depend on.
The stakes are enormous by any measure. US-Mexico goods and services trade hit $935.1 billion in 2024, according to the Office of the US Trade Representative, making Mexico the largest US trading partner for the second consecutive year. The port of entry in Laredo, Texas alone processed $339 billion in two-way trade that year. Vehicles, auto parts, electrical machinery, and medical devices flow north, while US gasoline, corn, pork, and dairy products move south. This is not an abstract policy discussion. It is the plumbing of daily life on both sides of the border.
How the USMCA Review Process Works
What was once expected to be a routine procedural check has transformed into a high-stakes negotiation. The Trumpadministration has signaled its intent to use the review as leverage on issues that extend well beyond tariffs, including migration enforcement, fentanyl trafficking, and Chinese investment in Mexican manufacturing. The Center for Strategic and International Studies (CSIS) has characterized the review as a potential “turning point” for North American integration. Whether it becomes a turning point or a breaking point depends largely on what happens over the next five months.
Article 34.7 of the USMCA requires the three member countries to conduct a formal review on the sixth anniversary of the agreement’s entry into force. If all three governments agree to renew, the deal extends for another 16 years, with the next review falling in 2032. If any party refuses, the agreement enters annual reviews and ultimately expires on July 1, 2036.
This is the first time any US trade agreement has included such a mechanism, so there is no precedent. The domestic process is already underway. The US Trade Representative (USTR) published a Federal Register notice in September 2025 inviting public comment and held three days of public hearings in Washington from December 3 to 5, 2025. Mexico’s government also opened its own public comment period. By January 2, 2026, USTR was required to submit a formal assessment to Congress outlining its position on whether to extend the agreement and any proposed changes.
The Pressure Points on the Table
Several flashpoints are expected to dominate negotiations. The automotive sector is chief among them. The USMCA requires that 75% of a vehicle’s content originate in North America to qualify for duty-free treatment, up from 62.5% under NAFTA. A labor value content rule mandates that a percentage of each vehicle’s value come from factories paying workers at least $16 per hour. The Independent Mexico Labor Expert Board, a body created by Congress to monitor compliance, reported in October 2025 that Mexico has failed to meet its labor obligations under the agreement. Mexican manufacturing wages sit at roughly $2.76 per hour, about 10% of the US equivalent.
The auto industry’s anxiety is already showing. Foreign direct investment in Mexico’s automotive sector dropped 20% in the first three quarters of 2025, falling to $7.8 billion from $9.8 billion the previous year, according to Mexico Business News. Japanese automakers, who have invested $87 billion across North America, submitted coordinated comments to USTR urging preservation of the agreement’s integrated production framework.
Then there is the China question. Chinese firms expanded their direct investment footprint in Mexico by as much as 288% through 2023, according to the Economic Policy Institute. US lawmakers from both parties have introduced legislation directing USTR to prioritize blocking Chinese companies from exploiting USMCA’s duty-free provisions. The review is expected to include new restrictions on content from non-market economies entering the North American supply chain.
What’s It All Mean for Expats and Visitors?
For Americans and Canadians living in Mexico, the practical implications range from grocery prices to healthcare access. The USMCA governs duty-free treatment for agricultural goods, which means the cost of imported cheese, pork, and dairy at stores like Costco Mexico and Walmart-owned Bodega Aurrera is directly tied to the agreement’s survival. Medical devices, many of which are assembled in Mexico under USMCA provisions, could see price increases if new tariffs are imposed on components.
Small business owners who import US-made goods for resale, or who export Mexican-produced artisan goods northward, would be among the first to feel disruptions. Even the broader peso-dollar exchange rate could be affected by market uncertainty if the review goes sideways.
The Road to July
Most trade analysts expect the agreement to be extended in some form. Outright termination would be economically catastrophic for all three countries, and no government has publicly suggested walking away. The more likely scenario involves a conditional extension paired with targeted amendments, particularly around automotive rules of origin, digital trade provisions, and labor enforcement.
The Baker Institute at Rice University has recommended that the review focus on confirming the agreement’s essential elements while making targeted updates. Others, including 105 House Democrats led by Representative Rosa DeLauro, have called for a complete overhaul of the labor and wage provisions.
Whatever happens at the negotiating table, the July 2026 deadline is a fixed date. Anyone with financial ties to cross-border commerce, whether that means running a restaurant that imports US beef, operating a property rental that caters to tourists, or simply living on a fixed income paid in dollars, should be paying close attention.