Inside the Mechanics of the 2026 USMCA Review

Commentary by Diego Marroquín Bitar and Juan Carlos Baker Pineda

Published October 27, 2025

Introduction

The 2026 review of the United States-Mexico-Canada Agreement (USMCA) will determine whether North America can lead the way in a new era of geopolitical competition. Under Article 34.7 of the agreement, the three governments must meet in July 2026 to decide whether to extend the pact, revise it, or risk its expiration in 2036. The process is already underway through public hearings, legislative consultations, and tariff negotiations that could reshape the region's economic architecture. With no binding procedures, politics, not law, will drive timing and outcomes. How Washington, Mexico City, and Ottawa manage the review will determine whether this process strengthens competitiveness or exposes divisions and raises costs. Coordination, especially between Mexico and Canada, will decide whether the region moves forward together or drifts into fragmented bilateral deals.

Decision Points That Will Shape North America's Next Decade

The USMCA, which governs nearly $2 trillion in annual trade and supports millions of U.S. jobs, contains a clause unlike any other in global trade: a mandatory review of its own performance and future. Under Article 34.7 of the USMCA, the Free Trade Commission (FTC), represented by the three governments' trade ministers, must meet in July 2026 to decide whether to extend the agreement to 2042, place it under annual reviews, or allow it to expire in 2036. This mechanism has become one of the most consequential mechanisms in modern trade policy.

By mid-November 2025, all three governments will have completed a synchronized phase of consultations. Already, Canada's Global Affairs Ministry has launched a second round of domestic outreach to define modernization priorities; Mexico's Economy Ministry has convened business, labor, and state leaders to evaluate the agreement's performance; and the U.S. Trade Representative (USTR) has held a public hearing to gather testimony from industry, unions, and civil society. On January 3, 2026, the USTR will submit a report to the U.S. Congress recommending whether to support renewal, followed by the July 1 FTC meeting that will determine the agreement's fate.

July 2026 is not a deadline; it is a decision node in a process that will shape North America's economic trajectory for the next decade. The outcome will test whether the region can sustain predictability and investor confidence amid renewed protectionism and intensifying competition with China. Each month of uncertainty acts as a silent tax on competitiveness, job creation, and trust in the region's economic governance.

Diplomatically, the review will also signal how Washington perceives its closest neighbors: either as strategic allies in shared prosperity or as ordinary counterparts in an increasingly fragmented global order.

Review or Renegotiation?

The USMCA's review clause was not conceived as a technical innovation, but as a political compromise. When the first Trump administration launched the renegotiation of the North American Free Trade Agreement (NAFTA) in 2017, it sought a mechanism that would give Washington lasting leverage over its partners. The resulting compromise became Article 34.7, which established a 16-year term and a mandatory review after 6 years, in 2026, at which point the three governments must decide whether to extend the agreement to 2042, place it under annual reviews, or allow it to expire in 2036. The following diagram traces the key phases and decision points of this process.

The clause ensured that the United States could revisit the agreement's terms whenever it believed its interests were being undermined. What negotiators did not anticipate was that the same political actor who demanded that the USMCA have an expiration date would return to oversee the first review. Article 34.7, intended as an insurance policy against political volatility, has instead turned a safeguard into a test of continuity and survival.

The clause's brevity leaves ample room for interpretation. The central question now is whether the 2026 process will be a review or a renegotiation. The distinction defines the level of ambition each country will bring to the table, the scope of issues to be addressed, the concessions that they will try to extract or defend from, and which institutions must approve the outcome.

As stated in Article 34.7, a review would focus on assessing the agreement's performance and introducing incremental adjustments through the FTC. Governments could clarify procedures, update regulatory tools, or streamline implementation where consensus exists. Such changes could be enacted through executive authority alone, without legislative ratification.

A renegotiation, by contrast, would reopen market-access commitments, alter the balance of concessions, and likely require congressional or parliamentary approval. Any move to reintroduce tariffs or export limits would fundamentally reshape expectations built into the USMCA and almost certainly require legislative approval.

Recent tariff measures and official statements leave little doubt: Washington intends to treat the process as a renegotiation. The strategy is to translate unilateral tariff leverage into structural concessions, reasserting U.S. primacy in key sectors even if that undermines the trilateral framework that has anchored North American integration.

Because Article 34.7 provides no procedural roadmap, outcomes will hinge on domestic politics. Without coordination, mismatched timelines and expectations could transform a scheduled review into an unintended renegotiation, driven more by drift than by design.

Domestic Processes in the Three Capitals

That ambiguity between a review and a renegotiation will play out differently in each capital, shaped by domestic politics and electoral timelines. Their ability to coordinate will determine whether the process remains trilateral or splinters into bilateral tracks dominated by Washington.

United States
The United States begins the process without Trade Promotion Authority (TPA), the legislative procedure that once allowed the president to negotiate trade deals that Congress could approve or reject in full but not amend. Since TPA expired in 2021, Congress can now exert greater influence over any revisions, creating an unpredictable ratification landscape.

There is also a real possibility that the Trump administration will move forward without TPA, or even sidestep Congress altogether. This would be especially problematic if the administration's proposals go beyond a limited review and imply structural changes to the agreement. Officials have already signaled interest in revisiting provisions on rules of origin, labor enforcement, energy market access, and domestic content requirements, and in potentially replacing the USMCA with separate bilateral deals.

The November 2026 midterm elections will add complexity. Although the new Congress takes office in 2027, campaign politics will dominate throughout 2026. Lawmakers from key manufacturing and agricultural states may pressure the White House to use the review to extract concessions from Mexico and Canada. The balance of power that emerges from the elections will also shape whether Washington negotiates pragmatically or confrontationally. So far, Congress has largely taken a back seat on trade policy during the first year of the second Trump administration, but that could change as the review gains visibility or if Democrats secure more seats.

Meanwhile, Washington is engaged in parallel negotiations with both partners on national security tariffs under Section 232 and on International Emergency Economic Powers Act (IEEPA) tariffs. These talks could become bargaining chips in the review, with tariff relief exchanged for concessions on labor, content, or dispute settlement procedures.

Mexico
Mexico's process is led by the executive branch and anchored in the Senate, which has constitutional authority to approve or amend international agreements. President Claudia Sheinbaum's majority provides stability as she defines priorities. The Senate's Special Commission on the USMCA has begun consultations with business chambers, labor unions, and state governments under the Ley de Celebración de Tratados.

Unlike the United States, Mexico lacks an equivalent to an implementing bill for trade agreements, meaning congressional engagement typically occurs at the end of negotiations. The Senate's proactive role this time aims to relieve pressure on the executive and create political cover for flexibility at the negotiating table.

Crucially, Sheinbaum has not reinstated the Cuarto de Junto, the mechanism that previously united private sector representatives and negotiators to coordinate technical positions. Its absence reflects a more centralized, state-driven approach to trade policy. Instead, the Economy Ministry is conducting targeted consultations with key industries. While Mexico would prefer a limited review, its stakeholders are preparing for a comprehensive renegotiation. Whether Sheinbaum introduces substantive proposals on energy, critical minerals, or labor will signal whether Mexico seeks to rebalance discussions or simply contain them. If Washington pushes for broader concessions, Mexico may try to delay or compartmentalize talks to avoid reopening the entire agreement.

Canada
In Canada, preparations under Prime Minister Mark Carney are unfolding at a time of sharp tension with Washington. Following U.S. tariff threats, Carney declared that "the old relationship based on deepening integration and tight cooperation is over," signaling an effort to diversify away from U.S. dependence.

Carney's September visit to Mexico City, the first by a Canadian prime minister in eight years, marked a strategic recalibration. Together with President Sheinbaum, Carney launched the Canada-Mexico Action Plan 2025-2028, creating a comprehensive strategic partnership to coordinate positions on economic security and the USMCA review. The initiative not only helped rebuild trust after Canadian officials signaled in late 2024 that Ottawa might pursue trade talks excluding Mexico, but repositioned both countries to act in concert and preserve leverage within a trilateral framework rather than through separate bilateral tracks dominated by Washington.

Carney's government is also engaged in parallel talks with Washington on Section 232 and IEEPA tariffs, viewing them as both risks and potential leverage. Ottawa's broader goal is to ensure that any review outcome does not erode market access for Canadian exports or weaken dispute settlement provisions that safeguard its industries.

Regional Outlook

Ultimately, the review and tariff talks are two sides of the same negotiation. Outstanding disputes, unresolved trade irritants, and linked negotiations could extend into 2027 and beyond. Coordination between Mexico and Canada will be essential to preserve trilateral leverage and prevent Washington from setting the terms through parallel bilateral deals.

Policy Recommendations: Managing the 2026 USMCA Review

1. Prioritize Trilateral Coordination over Bilateral Concessions
   Mexico and Canada should coordinate positions before entering the July 2026 FTC meeting. A unified approach on dispute settlement, market access, and tariff management would preserve leverage and prevent Washington from isolating each partner in parallel negotiations.
2. Establish a Sequenced Negotiation Framework
   The three governments should agree early on the order, scope, and timeline of negotiations, particularly where ongoing Section 232 and IEEPA tariff talks intersect with the review. Sequencing ensures that technical discussions (e.g., auto rules of origin, digital trade, or labor enforcement) do not become hostage to electoral cycles or national security disputes, reducing the risk of spillover into 2027 and beyond.
3. Signal Predictability to Markets
   Clarity in process is as important as substance. Governments should jointly communicate milestones and outcomes to reassure investors. Coordinated statements or communiqués can mitigate uncertainty and project that North America remains a reliable production platform amid global volatility.
   

Conclusion

The 2026 USMCA review will be a defining test of whether North America can update its integration model without unraveling it. A coherent and transparent process would signal resilience, restore investor confidence, and demonstrate that the region can adapt to new economic realities without sacrificing predictability. A fragmented or prolonged process, by contrast, would amplify perceptions of risk, raise borrowing costs, and divert supply chain investment toward Asia and Europe. Each month of uncertainty carries real economic costs, discouraging investment and allowing global rivals to gain ground.

Process discipline also shapes bargaining power. When governments align early on scope and timing, they limit the space for brinkmanship and unilateral pressure. When they do not, asymmetry fills the vacuum-Washington's market size becomes leverage, while Mexico and Canada are left to react rather than shape outcomes.

For Mexico and Canada in particular, coordination will be decisive. Acting jointly within a trilateral framework is the best way to preserve leverage and avoid being drawn into two separate bilateral negotiations. A common front with coordinated statements allows both to help shape the agenda, defend shared interests, and preserve the trilateral structure that underpins regional stability.

For policymakers, the lesson is clear: Process is strategy. The credibility of North American integration will depend less on what is renegotiated and more on how the review is managed, whether through coordination, clarity, and commitment, or through unilateralism and uncertainty.

Diego Marroquín Bitar is a fellow with the Americas Program at the Center for Strategic and International Studies in Washington, D.C. Juan Carlos Baker Pineda is the CEO and founding partner of Ansley International Consultants.

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