USMCA Not Renewed: Planning North American Sourcing

By /

On July 1, the United States, Mexico and Canada held the first six-year joint review of the USMCA. The US did not agree to renew the agreement in its current form. Three months later, the agreement is still in force, talks are uneven, and USTR has opened the next round of public comments.

For a manufacturer that buys from Mexican or Canadian suppliers, or ships product across either border, the question is not whether USMCA ends tomorrow. It is how to plan sourcing when the rules could tighten each year.

Where things stand in early October

The agreement is in force, with annual reviews

Non-renewal is not termination. Under Article 34.7, the parties now hold a joint review every year until all three confirm a new 16-year term, or until the current term ends on July 1, 2036. That is spelled out in USTR’s Federal Register notice published October 5.

The same notice opens comments for the 2027 review. Written comments and requests to testify are due by January 12, 2027. USTR asks small businesses, generally those with fewer than 500 employees, to identify themselves so it can see issues that matter to smaller firms.

Talks with Mexico continue; talks with Canada are stalled

According to the ICPA joint review tracker (updated October 4), a fourth US-Mexico negotiating round slipped from late September to October with no date announced. Mexico’s economy secretary met USTR on October 1 at the G20 trade meeting in Milwaukee, but no agreement was announced. Bloomberg reported that Mexico expects a deal that would cut the US tariff on Mexican-built light vehicles from 25% to 15%. Neither government has confirmed it, so treat it as a report, not a rule.

The Canada track looks different. Canada suspended negotiations in August. On October 1 Ambassador Greer said a handful of remaining issues are “quite difficult to resolve,” the tracker notes.

What negotiators are focused on

A July analysis from Baker Donelson lists the main topics in the US-Mexico talks. They are rules of origin, automotive and steel content, regional value content thresholds, and measures to keep Chinese inputs out of North American supply chains. The firm’s warning is the one to remember: supply chains that qualify today may not qualify under tighter rules.

Treaty status and tariff exposure are two different questions

This is the part that catches people out. USMCA can be fully in force while a specific shipment still pays high duties. The 50% Section 338 tariffs on covered Canadian goods apply whether or not the goods qualify under USMCA, Supply Chain Dive reported, and they stack on Section 232 duties. Mexico, meanwhile, is still pressing for relief from Section 232 tariffs on steel and vehicles, according to the ICPA tracker.

So when you ask “are we covered by USMCA?”, ask a second question for each part: “what will this entry actually pay?”

How companies are responding

Large manufacturers are making moves, but carefully. AFP reported on October 4 that Toyota plans to move Tacoma pickup production from Mexico to San Antonio as part of a $3.6 billion plan. In August a Honda executive said the company wanted to build a new North American plant but might pivot if the uncertainty around USMCA persists.

Suppliers are more cautious. Citing Center for Automotive Research data, AFP reported that auto supplier investment fell from more than $8 billion in the first quarter of 2025 to around $600 million in the two quarters that followed, before recovering somewhat. An analyst quoted in the piece made a point every owner will recognize: plants are built to last decades, not one political cycle.

For smaller firms the lesson is the same. Big, irreversible sourcing moves made on headlines are risky. So is doing nothing.

What this means for your business

  1. List every part and finished good that relies on USMCA preference, and put a dollar figure on the duty you would pay without it.
  2. Get your origin paperwork in order now: supplier certifications, bills of material with country of origin, and regional value content calculations. Expect auditors and customers to ask for more.
  3. Run three scenarios: today’s rules, stricter content and China-input rules, and loss of preference with one partner. Compare landed cost in each with our free landed cost calculator.
  4. Stage your commitments. Qualify a second source or add capacity options before you sign anything long-term.
  5. If the rules affect you, consider filing a comment by January 12, 2027, and identify yourself as a small business.

If you want help mapping USMCA exposure or comparing nearshoring options, our supply chain consulting work starts with a free 30-minute call, and we agree the scope with you before any work starts.

Sources

This article summarizes public reporting and research as of October 5, 2026. It is general information, not legal, customs or tax advice.

Scroll to Top