Mexico, U.S. Race Against Election Clock to Seal Trade Deal

Mexico and the United States are preparing for a fourth round of trade talks in Washington as both sides seek progress before the Nov. 3 U.S. midterm elections, with automotive rules, tariffs and supply-chain policy among the key issues.

The talks are part of the first joint review of the United States-Mexico-Canada Agreement (USMCA), which entered into force in July 2020 and is scheduled to remain in effect through 2036 unless the three countries agree to extend it.

The United States declined to confirm a 16-year extension at the July 1 review, leaving the agreement subject to annual reviews until the parties agree on an extension or the pact reaches its scheduled termination date.

The urgency has increased as the U.S. election approaches and trade tensions between Washington and Ottawa have complicated the broader North American trade relationship. Washington and Mexico are working to advance an interim trade arrangement before the election, while more difficult structural issues could extend into 2027.

Fourth Round Set for Washington

U.S. Trade Representative Jamieson Greer and Mexican Economy Secretary Marcelo Ebrard agreed in July to hold a fourth bilateral negotiating round in Washington in September. The decision followed three rounds held in Mexico City and Washington between May and July.

The third round covered economic security, labor, agriculture, electronic payment services, steel and aluminum, automobiles and related supply-chain issues. Greer and Mexican President Claudia Sheinbaum also discussed the need to strengthen North American manufacturing and regional supply chains while reducing dependence on non-USMCA countries.

The U.S. Trade Representative’s office said the talks had also produced progress in areas including Mexico’s export controls, intellectual property enforcement, customs procedures, environmental measures and telecommunications equipment.

The negotiations began formally in May after months of preparatory discussions. The first round focused on automotive rules of origin, steel and aluminum and economic security, while the second round expanded discussions to agriculture, labor, environment and other areas.

54 Issues Reduced to 14

Mexico’s Economy Ministry reported in July that the number of issues raised by the United States had fallen from 54 to 14 during the negotiations. The figure was included in a report submitted to Mexico’s Permanent Commission, according to Mexican media reports.

Washington is seeking stronger rules governing the amount of U.S. content in vehicles that qualify for preferential treatment under the trade agreement. The U.S. proposal calls for 50% U.S.-made content, a position Mexico opposes.

Under the existing USMCA rules, vehicles generally must contain at least 75% North American content to qualify for duty-free treatment, without requiring a fixed percentage from any individual member country.

Mexico is also seeking changes to U.S. tariffs affecting automobiles, steel and aluminum. President Sheinbaum said in August that Mexican vehicles face a 25% U.S. tariff and that steel, aluminum and derivatives face a 50% tariff.

Ebrard has argued that Mexico should receive preferential treatment because of the level of U.S. content used in Mexican manufacturing.

“The conversations were constructive and produced advances on topics like steel, aluminum” and substitution of imports from Asia, Ebrard said in a statement following the July talks.

Mexico Seeks Lower Tariffs as Canada Talks Break Down

Mexico’s position has gained importance as U.S.-Canada trade negotiations have deteriorated.

The dispute has added pressure to the wider North American trade framework and increased the incentive for Mexico to secure greater clarity in its own trade relationship with Washington. The U.S.-Mexico discussions are continuing separately from the Canadian negotiations.

Sheinbaum said Aug. 24 that Mexico was continuing to negotiate with Washington while seeking to avoid additional tariffs.

“I wouldn’t want to call it a rupture,” she said of the U.S.-Canada dispute, describing it instead as a “desencuentro” or disagreement. She added, “We hope to reach an agreement with the United States. I’m optimistic that an agreement can be reached.”

Sheinbaum also confirmed that Ebrard was in the United States for discussions and said Mexico wanted an agreement that protected the interests of both countries.

Election Deadline Raises Pressure

The Nov. 3 midterm elections give the negotiations a political deadline, although there is no formal USMCA requirement that an agreement be completed before the vote.

The Trump administration has indicated that it wants interim arrangements with Mexico and Canada during 2026 while leaving more difficult USMCA questions, including automotive content, labor and environmental standards, for further negotiations. Greer made that position clear in Senate testimony.

Former U.S. Rep. Kevin Brady, who previously chaired the House Ways and Means Committee, offered a cautiously positive assessment of the negotiations.

“At this point, every negotiation round adds value,” Brady said, “The negotiations are not in a bad place.”

The September round will test whether the two sides can narrow differences over automotive content and tariff treatment while advancing the broader USMCA review.

Under the review mechanism, the United States, Mexico and Canada will continue annual reviews if they do not jointly agree to extend the pact. If no extension is reached, the USMCA is scheduled to terminate July 1, 2036.

The immediate political deadline could determine whether Washington and Mexico can reach an interim arrangement before voters head to the polls.