Toward the USMCA Renegotiation: Mexico-US Trade Moves $2.3 Billion Daily

Every day, approximately $2.3 billion worth of goods cross the border between Mexico and the United States. Trade between the two countries reached $872 billion in 2025.

At this border, more than 21,000 trucks cross daily carrying goods, roughly 10 million jobs exist across both economies, and Mexican customs collect more than 1 trillion pesos, making it a strategic matter in terms of tax revenue.

That is the scale of the challenge facing the bilateral negotiation between Mexico and the United States set for July 20, says Pedro Canabal Hermida, partner at Baker Tilly Mexico.

“Mexico arrives at the USMCA review under political pressure, but also with commercial strength. Let’s not forget that we are the leading trading partner of the United States… I believe Mexico has a strong negotiating position,” he explained.

The partner at the Mexican Institute of Foreign Trade Executives (IMECE) explained that Mexico must come to the table ready to demonstrate the origin of goods, traceability, and regional production capacity.

He noted that the strategy should be regional: strengthening production in North America, reducing critical external inputs, and attracting investment in strategic sectors such as semiconductors, pharmaceuticals, computing, electronics, and high-value chains.

He added that Mexico is not only being watched, but is also putting its own objections to U.S. measures on the table, including the 13 trade concerns, the Section 232 tariff increases covering steel, copper, and automotive products.

As well as non-originating products under Section 122, sectoral restrictions, use of the Rapid Response Labor Mechanism, and certain state-level trade barriers.

Return to zero tariffs ruled out

In the bilateral negotiation between Mexico and the United States starting July 20, 2026, it will be very difficult to return to zero tariffs on steel, aluminum, and the automotive industry, but reducing them should still be a priority, experts noted.

Oscar Ocampo, Director of Economic Development at the Mexican Institute for Competitiveness (IMCO), explained that achieving a reduction to zero, as it was before, is highly unlikely.

“What is likely is a reduction on steel. Today it faces a 50% tariff, and that pushes it out of the market. The United States needs a lot of steel for all of the administration’s reindustrialization plans. They are the ones who need much more steel. In some way you need that steel, and Mexico and Canada end up being your natural suppliers of that steel,” he explained.

Pedro Canabal, partner at Baker Tilly Mexico, added: “Hopefully there will be a reduction, because a 50% tariff is outrageous. Hopefully it’s achieved and reduced, but I would see it more after the elections, not before,” he explained.

Gabriela Siller, Director of the Economic Division at Banco Base, said the ideal scenario would be to remove tariffs altogether, since they shouldn’t exist in these trade agreements.

According to Pedro Canabal, it is not ruled out that after the negotiation round, if there is no clear understanding of what Mexico raises as concerns, there could be retaliation through some decree similar to the one issued in 2018 on certain products from certain U.S. regions that could be sensitive for electoral purposes.

The role the EU treaty will play

Canabal highlighted the importance of strengthening the treaty with the European Union, which opens the door to a market of 450 million people without tariffs.

“It’s a market of value, not a market of volume. It’s a market that buys less, but at higher prices — that is, more sophisticated products. And then there’s South Korea, which, although we don’t have a free trade agreement with them, we do have an alliance and a ministerial understanding where discussions are beginning around South Korean foreign direct investment into Mexico,” he said.

Aiming to remove tariffs and boost investment in semiconductors

Resolving steel and aluminum tariffs, preserving automotive competitiveness, and accelerating investment in strategic sectors such as pharmaceuticals, semiconductors, computing, and electronics are part of the agenda Mexico will bring to the first bilateral negotiation with the United States.

The Ministry of Economy states that its priorities also include: a protocol against unilateral measures; economic security frameworks; attention to pending bilateral matters; and actions to raise certainty levels for investment.

The agency, led by Marcelo Ebrard, delivered a report to the Senate of the Republic on the status of the review process between Mexico, the United States, and Canada (USMCA), stating that the agenda seeks to consolidate Mexico’s trade advantages in the new global trade order.

“Mexico will focus on generating signals of investment certainty, demanding that the United States eliminate tariffs among member countries, especially in the steel, aluminum, and automotive sectors, seeking instead to strengthen regional competitiveness,” the document states.

In addition, the agency will focus on promoting investment in strategic sectors such as semiconductors, pharmaceuticals, computing, and electronics.

“In particular, the goal is to increase North America’s production capacity, reduce external dependencies on critical inputs and components tied to high-value chains, and secure a competitive advantage relative to the rest of the world,” it detailed.

Context: the next round of talks between Mexico and the United States is scheduled for July 20, 2026, with the goal of advancing discussions on issues of relevance to both parties, defining next steps in the process, and communicating results once the round concludes.

Trade deficit and rules of origin: what the US is expected to raise

According to information from the Ministry of Economy, the United States will raise concerns about job losses in certain manufacturing sectors, high dependence on third countries in supply chains, the trade deficit, rules of origin, and economic security.

It added that significant progress has been made in the talks, with pending issues dropping from 54 to 14 in recent months.

From Mexico’s perspective, according to the Ministry of Economy, these issues can be addressed through a regional strategy that strengthens production in North America and reduces dependence on imports from Asia.