USMCA wasn't renewed at its first review. Here's what annual reviews through 2036 mean for North American sourcing
The U.S. declined to extend the agreement on July 1, so the three countries now review it every year. The pact stays in force until 2036, but auto rules of origin, steel and aluminum are open for negotiation.
Article summary
- Why it matters: Nearshoring to Mexico rests on USMCA. The agreement hasn’t ended, but it is no longer a settled 16-year framework. Annual reviews and bilateral talks mean rules of origin, metals measures and other terms could change before 2036, and procurement plans built on Mexican or Canadian supply should account for that.
- What to do first: Audit USMCA claims. Make sure certificates of origin are current and that suppliers can support them. Preference also shields qualifying goods from the Section 301 forced-labor tariff .
- Build change clauses into Mexican and Canadian supply agreements. Spell out who absorbs cost if origin rules or duties change.
- July 1, 2026
- first six-year joint review
- 2036
- agreement stays in force until July 1, 2036
- Annual
- reviews now required each year
- 3
- U.S.–Mexico negotiating rounds held by late July
On this page
The details
The USMCA Free Trade Commission held the agreement’s first six-year joint review on July 1, 2026. U.S. Trade Representative Jamieson Greer said the United States “did not agree to renew the USMCA in its current form.” Mexico and Canada both supported a 16-year extension.
Because the U.S. did not confirm an extension, the parties now review the agreement every year through July 1, 2036, when it would expire. They can still agree to extend it at any point.
Bilateral talks instead. The U.S. chose separate negotiations with each partner. With Mexico, three rounds were completed by late July, with a fourth scheduled for September. Topics include:
- Automotive rules of origin and automobiles
- Steel, aluminum and derivative products
- Economic security
- Labor and environment
- Electronic payment services, regulatory compatibility and agriculture
As of late July, no formal U.S.–Canada talks had been held.
Investment protections. The investment chapter has no general survival clause after termination, according to IISD’s analysis, so a future U.S. withdrawal could end protections for existing investments.
How the extension clause works. Article 34.7 gives the agreement a 16-year term from its 2020 entry into force and requires a joint review at the six-year mark, according to a White & Case analysis. If all three countries confirm in writing that they want another 16 years, the term resets without renegotiation. Because the U.S. didn’t confirm, the agreement now gets a joint review every year until 2036, and each one is a fresh chance to extend. Current rights stay in force throughout: preferential tariffs, rules of origin, investment protections and dispute settlement.
What the rounds have covered. The first U.S.–Mexico round, in Mexico City on May 28–30, covered auto rules of origin, steel and aluminum and economic security. The second, in Washington on June 16–17, advanced rules of origin for certain industrial goods and began conceptual talks on agriculture, labor, environment, steel, aluminum and autos. A third round followed in Mexico City in late July.
Canada’s position. Canada signaled support for a 16-year renewal in a June 1 letter from minister Dominic LeBlanc. Its priority is U.S. sectoral tariffs on steel, aluminum, autos and lumber, and it had not begun substantive text-based negotiations with the U.S. by late July.
Why the investment chapter matters for sourcing. Most bilateral investment treaties include a sunset period that keeps protecting existing investments for years after termination; USMCA’s Chapter 14 does not, IISD notes. That matters for companies that have built or financed supplier plants in Mexico, and IISD links the investment stakes to critical minerals supply chains. Under Article 34.7.4, the extension can still be confirmed at any time before 2036.
Timeline
| Date | Event |
|---|---|
| July 1, 2020 | USMCA enters into force with a 16-year term |
| May 28–30, 2026 | First U.S.–Mexico round, Mexico City |
| June 1, 2026 | Canada signals support for a 16-year renewal |
| June 16–17, 2026 | Second U.S.–Mexico round, Washington |
| July 1, 2026 | First joint review; the U.S. does not confirm an extension |
| Late July 2026 | Third U.S.–Mexico round, Mexico City |
| September 2026 | Fourth U.S.–Mexico round scheduled |
| July 1, 2027 | Next annual joint review |
| July 1, 2036 | Agreement expires unless extended |
Three scenarios for North American sourcing
| Scenario | What changes | What it means for sourcing |
|---|---|---|
| Extension agreed at a future review | Term resets to 16 years | Nearshoring plans regain a long horizon |
| Rolling reviews with targeted changes | Tighter auto rules of origin, metals terms or labor provisions | Some parts lose preference unless suppliers change inputs |
| Breakdown of talks | Higher risk of withdrawal or loss of preference | Duty and investment risk on Mexican and Canadian supply |
These scenarios are our framework. The second is the most likely near-term path given the bilateral talks under way.
What losing preference would cost
USMCA preference means qualifying goods enter duty-free. A part that no longer qualifies pays the normal U.S. duty for its classification, and for many goods that now includes Section 232 or other duties layered on top. For a sourcing team, the useful exercise is to list your top Mexican and Canadian parts by spend, note the duty each would pay without preference, and multiply. That figure is the value at risk in each annual review, and the number to bring to suppliers when discussing origin compliance and contract terms.
Exposure by category
| Category | Why it’s exposed | Our read |
|---|---|---|
| Automotive parts | Rules of origin are under negotiation | Highest risk of rule changes; track every round |
| Steel and aluminum products | Active negotiation topic, plus Section 232 duties | Expect continued volatility in landed cost |
| Electronics and electrical assembly | Heavy Mexico assembly; origin rules matter | Keep certificates of origin current |
| Agriculture and food | On the agenda | Watch for changes to market access |
What procurement teams should do
- Audit USMCA claims. Make sure certificates of origin are current and that suppliers can support them. Preference also shields qualifying goods from the Section 301 forced-labor tariff.
- Build change clauses into Mexican and Canadian supply agreements. Spell out who absorbs cost if origin rules or duties change.
- Stress-test nearshoring business cases. Run scenarios where preference is lost on key parts.
- Keep an eye on the border. Separate from USMCA, cross-border trucking capacity is tight.
Questions to ask Mexican and Canadian suppliers
- Which of our parts do you certify as USMCA-originating, and under which rule of origin?
- For auto parts, what is the regional value content today, and how much room is there if the threshold rises?
- Which inputs come from outside North America, and could you switch them?
- Who bears the duty if a part loses preference after a review?
- How quickly can you produce origin documentation if U.S. Customs asks for it?
What to watch next
- The fourth U.S.–Mexico round and any agreed changes to auto rules of origin.
- U.S.–Canada talks, which had not formally started by late July.
- Jan. 12, 2027 comment deadline. USTR opened public comments on the operation of the agreement ahead of the 2027 joint review (Federal Register document 2026-20341, docket USTR-2026-0595). Comments and requests to testify at a public hearing are due by 11:59 p.m. EST on Jan. 12, 2027; USTR will post the hearing date on its website. Companies with North American supply chains can put their rules-of-origin and cost data on the record.
- The 2027 annual review, the next chance to confirm an extension.
The bigger picture
USMCA has moved from a long-term framework to a rolling negotiation. That doesn’t make Mexico or Canada less attractive for sourcing, but it raises the value of flexibility: dual sourcing, documented origin and contracts that anticipate rule changes.
Questions procurement teams are asking
Is USMCA still in force?
Yes. The agreement remains fully in force until July 1, 2036. The parties can still agree to extend it at any annual review.
What happens after the U.S. declined to renew USMCA?
The three countries now hold annual reviews through 2036, and the U.S. is negotiating bilaterally, starting with Mexico, on topics including auto rules of origin and steel and aluminum.
Should we still claim USMCA preference?
Yes, where goods qualify. USMCA preference also exempts qualifying goods from some newer tariffs, such as the Section 301 forced-labor duty, so documentation matters more than ever.
When is the next USMCA review?
The parties review the agreement every year after the U.S. declined to confirm an extension on July 1, 2026. The next joint review falls on July 1, 2027, and an extension can be agreed at any review.
Do USMCA preferences still apply after the U.S. declined to renew?
Yes. Preferential tariffs, rules of origin, investment protections and dispute settlement all stay in force while the agreement is reviewed annually through 2036.
How we reported this
This analysis draws on 3 sources, listed below, and reflects figures as reported on September 10, 2026. The sections on why it matters and what procurement teams should do are Procurement Signal analysis. It is not legal or financial advice. See our editorial standards.
