Trade officials from the United States and Mexico sat down Tuesday in Mexico City for a third round of bilateral negotiations aimed at revising the North American trade agreement, even as President Donald Trump announced a fresh wave of penalties targeting Canadian imports.
The three-day talks, which do not include Canada, mark the first formal discussions about updating the U.S.-Mexico-Canada Agreement since the Trump administration chose not to extend the six-year-old trade pact on July 1. That decision set a 10-year countdown for USMCA to expire unless the three nations can agree on meaningful improvements. Business and industry groups have urged Trump to preserve the trilateral structure and the largely tariff-free trade framework that supports nearly $1.6 trillion in commerce each year.
Mexico’s newly appointed ambassador to the United States, Roberto Lazzeri, said Friday that his country expects a new deal to be reached before the end of the year, and he believes Washington and Ottawa share that same goal.
“Every moment that we’re losing, I think we are losing competitiveness, market share and investment, so it’s in the best interest of all three of us to get to a position of resolution soon,” said Lazzeri, who previously worked as an investment banker and finance ministry official.
Lazzeri also noted that Mexico is aligned with the Trump administration’s push to bring more manufacturing back to North America, including to the United States. A central priority for Mexico in these talks is securing some relief from Trump’s 25% national security tariffs on Mexican automobiles and 50% tariffs on steel and aluminum — duties that also apply to Canada.
The negotiations began just one day after the Trump administration unveiled new tariffs on roughly $20 billion worth of Canadian goods. That action was a response to Canada’s own retaliatory tariffs on American autos, steel, aluminum, and liquor, as well as its high dairy tariffs.
The move has widened the divide between Washington and Ottawa, with U.S. Trade Representative Jamieson Greer noting that Canada has shown little willingness to make concessions. Canada has largely been left out of the ongoing USMCA revision process as a result.
Canadian Prime Minister Mark Carney pushed back, saying in a statement that his government had put forward comprehensive proposals to settle the trade disputes with Washington, and arguing that Trump’s previous tariffs had already violated the North American trade pact.
Greer, by contrast, has praised Mexico for not retaliating against U.S. tariffs and for taking a “pragmatic” approach to the talks. That cooperation has included efforts to align Mexico’s export controls with those of the U.S., strengthen protections for intellectual property, and limit the export of avocados grown on illegally deforested land.
The Mexico City discussions are expected to dig into technical details across several sectors, including autos, steel, aluminum, agriculture, and labor, according to Greer’s office. A major theme will also be what the U.S. Trade Representative’s office calls “economic security” — a push to raise trade barriers that would prevent China and other Asian countries from using Mexico or Canada as a back door to access the U.S. market at preferential rates.
China’s expanding presence in Mexico’s automobile market could complicate the talks. New distribution data reported Monday showed Chinese car sales in Mexico climbed 30% during the first half of 2026, even with 50% tariffs in place since January. Chinese brands now hold a 17% share of the Mexican auto market, up from 14% a year earlier.
Sources familiar with the negotiations say the U.S. is pressing its North American partners to adopt similar trade barriers on goods from outside the region, including vehicles, auto parts, steel, aluminum, and other components.
During an earlier round of bilateral USMCA talks with Mexico in May, the U.S. Trade Representative’s office proposed that 50% of the value of any vehicle built in North America must originate in the United States — a dramatic shift from current rules that would pose a major challenge for automakers whose supply chains are deeply integrated across the region.
Greer has also pointed to the widening U.S. trade deficit with Mexico as a key concern for Trump. That gap grew by $28 billion, or 17%, reaching $197 billion in 2025, according to figures from the U.S. Census Bureau. Mexico has gained ground in recent years as companies shifted supply chains away from China in response to earlier rounds of U.S. tariffs.
