On 1 July 2026, the United States, Mexico, and Canada held the first mandatory joint review of the USMCA under Article 34.7, and the United States declined to renew the agreement for a further 16 years.
This did not end the agreement. It triggered an annual review process: the USMCA remains fully in force through 2036, current preferential treatment continues, and companies do not need to change their customs filings today. But the tariff-free access that governs roughly USD 1.8 trillion in annual North American trade is now subject to year-over-year renegotiation, with rules of origin, North American content thresholds, and Chinese-content restrictions all on the table.
Every USMCA 2026 review importer now faces three concrete questions: whether your existing Certificate of Origin will hold as rules are renegotiated, whether your goods with Chinese-origin components will keep qualifying under the tighter rules being discussed, and what your landed cost looks like as the annual cycle unfolds. This guide answers all three, in light of what the review actually decided.
USMCA 2026 Review: At a Glance
- What happened: on 1 July 2026 the US declined to renew USMCA in its current form. Mexico and Canada supported extension.
- The result: not termination, but an annual joint review process. USMCA stays in force through 2036, and current rules and tariff preferences are unchanged for now.
- The direction: a two-track bilateral approach, with US-Mexico talks advancing and Canada largely disengaged. The next US-Mexico round was held the week of 20 July.
- The agenda: tighter rules of origin, higher North American content thresholds in autos and metals, and specific new mechanisms to exclude Chinese-origin content, foreign-entity-of-concern rules, capital-exclusion clauses, and transshipment enforcement, covered in detail below.
- The action for importers: the rules are unchanged today, but the renegotiation has begun, so the time to audit origin, map Chinese content, and model landed cost is now.
Why This Review Was Not Business as Usual
USMCA has a built-in mechanism that forces the three governments to actively confirm they want to keep it. Unlike most trade agreements, which continue indefinitely unless a party withdraws, USMCA is scheduled to expire in 2036 unless all three parties agree to extend it at the six-year reviews in 2026, 2032, and so on. This was a deliberate political compromise in the 2018 negotiation: the first Trump administration wanted a mechanism that kept the US in permanent control of the agreement’s terms. It is the same administration that oversaw the first review in 2026.
The signals ahead of the review were clear. USTR Ambassador Jamieson Greer had stated that a rubberstamp of the agreement was not in the national interest, and the review launched bilaterally rather than trilaterally in March 2026, narrowly scoped to increasing US-Mexico production and limiting non-market inputs into North American supply chains. When the Free Trade Commission met on 1 July, the US followed through: it did not agree to renew. This was never going to be a routine technical review. It became, and remains, a contested renegotiation now running on an annual clock.
What the Review Decided, and the Two-Track Negotiation Now Underway
The outcome matched what had been the lower-probability scenario in most pre-review analysis: no trilateral consensus, and an annual review cycle rather than a clean 16-year extension. The base-case expectation of a quick renewal with targeted revisions did not materialise. Here is what is now settled, and what is not.
Settled: USMCA is not renewed for a further 16 years, but it has not lapsed. It remains fully in force and is scheduled to run to 1 July 2036. The annual joint review process now applies, meaning the agreement is renegotiated each year until the parties either agree to a 16-year extension, which remains available at any time through written confirmation, or it expires in 2036. Preferential tariff treatment continues, existing rules of origin still apply, and importers do not need to change customs filings today.
Not settled: almost everything about the future shape of the agreement. The administration has signalled a two-track bilateral approach that could produce diverging rules across the region. US-Mexico talks are advancing, with Mexico working through a reported 52 US trade demands and positioning itself as Washington’s preferred partner, including by imposing its own tariffs on around 1,400 products aimed at Chinese imports.
A further US-Mexico round was held in Mexico City the week of 20 July. Canada, by contrast, has been largely disengaged, with no confirmed timeline for formal US-Canada talks. For importers, this two-track dynamic is itself a planning variable: the rules that eventually apply to Canadian-routed goods and Mexican-routed goods may not be the same. Our companion analysis of the deadline outcomes is in our guide to the converging North American tariff deadlines.
The Chinese-Content Risk: Now the Confirmed Agenda, Not a Hypothetical
The most commercially significant and least discussed aspect of the USMCA review for importers is the Chinese-content question, and the review confirmed it as a central US aim rather than a speculative one. It affects far more businesses than just automotive manufacturers.
The US intent is explicit: building what analysts describe as a “Fortress North America,” a systematic effort to reduce the continent’s supply-chain dependence on China. The specific mechanisms now under negotiation include:
- Foreign entity of concern restrictions: proposals would direct USTR to prioritise protecting USMCA from Chinese state-linked investment, which applied to manufactured goods could exclude components made by certain state-affiliated entities from counting toward regional value content.
- Chinese capital exclusion clauses: a revised USMCA could disqualify goods from benefits if they use core components from Chinese-controlled manufacturing, regardless of where final assembly happens. This would directly affect any importer sourcing through Mexico-based manufacturers with second-tier Chinese suppliers.
- Transshipment enforcement: the administration has framed the review explicitly as a mechanism to address Chinese goods entering the US via Mexico without sufficient transformation. A business that manufactures in Mexico using Chinese inputs and sells into the US under USMCA has been flagged as the structural problem the review is designed to solve.
This is not an automotive-specific risk. It applies to any manufacturer in Mexico whose bill of materials contains significant Chinese-origin components: electronics, batteries, machinery, chemicals, and consumer goods made in Mexico with Chinese inputs are all potentially affected. Importers who have never audited their second and third-tier supplier origin should do so now, before thresholds are set, because the negotiating direction is confirmed even though the specific numbers are not.
The rules are unchanged today, but the annual renegotiation has begun, and your Chinese-content exposure and origin documentation are what decide your position. Carra Globe acts as importer of record across all three USMCA countries through locally registered entities, auditing USMCA origin, mapping second-tier Chinese content, and modelling landed cost as the annual cycle unfolds, across 175+ countries.
Sector-by-Sector Exposure Under the Annual Review
| Sector | Current USMCA Position | Renegotiation Risk | Specific Importer Action |
|---|---|---|---|
| Automotive and parts | 75% RVC, 40-45% LVC, 70% North American steel and aluminium | Highest. US pushing to raise RVC, tighten LVC, and restrict Chinese-origin components in engines and batteries | Audit every CoO. Map Chinese-origin content in second-tier suppliers. Model landed cost at 50% Section 232 if qualification fails |
| Electronics and tech hardware | Generally qualifying under ITA zero duty plus USMCA | High. Nearshoring has increased Mexico-based electronics scrutiny; Chinese component content under direct review | Confirm origin of PCBs, chips, and wireless modules. Tighten documentation now |
| Batteries and critical minerals | Currently qualifying under broader regional content rules | High. New provisions expected addressing battery supply chains and rare earth sourcing | Assess whether battery cell suppliers are Chinese-affiliated. Map rare earth input origins |
| Steel, aluminium, and metals | 70% North American sourcing for automotive; Section 232 applies independently at 50% | Medium-high. Tighter North American content thresholds expected | Verify steel mill certificates. Confirm North American sourcing documentation |
| Consumer goods and apparel | Generally lower RVC thresholds; tariff preference levels apply to some categories | Medium. Less directly targeted, but Chinese-content provisions apply broadly | Review bill of materials for Chinese-origin inputs above threshold |
| Digital trade and services | Governed by USMCA Chapter 19 on data flows, source code, and algorithmic transparency | Medium. Digital chapter under review, with potential changes to source-code disclosure and cross-border data flow rules | Review contracts for source-code provisions. Assess cross-border data flow dependencies |
| Energy and petroleum | USMCA includes specific energy provisions | Medium. Energy market access is a bilateral US-Mexico tension point, not the primary focus | Monitor bilateral energy developments separately from the joint review |
What Happens to Your Certificate of Origin Now
This is the question every importer needs a direct answer to, and the annual-review outcome makes it answerable more clearly than the pre-review uncertainty allowed.
Because the agreement remains in force, your existing Certificates of Origin remain valid, and goods that qualify under the current rules of origin continue to enter duty-free exactly as before. The annual review did not change the rules on 1 July, and it did not invalidate a single existing CoO.
What it introduced is forward risk: as the renegotiation proceeds, rules of origin thresholds may rise, and Chinese-content or transshipment provisions may be added. If and when revised thresholds are agreed, based on how both USMCA and NAFTA handled previous rule changes, a transition window of roughly one to three years would typically apply before the new thresholds bind.
The critical caveat is the same in every scenario: a transition window protects compliant declarations made under current rules. It does not protect a CoO that is already missing supporting documentation. An audit that finds a claim resting on a threshold calculation you cannot fully support, or Chinese-origin content you never tracked, creates back-duty liability regardless of what the negotiation produces, and the penalty exposure on top is material.
Under 19 USC 1592, an unsupported origin claim can draw a civil penalty of up to twice the duty loss for simple negligence, up to four times for gross negligence, and up to the full domestic value of the goods for fraud, with the back duties always owed on top. On a shipment where a failed USMCA claim exposes, say, USD 40,000 in duties, that is USD 80,000 to USD 160,000 in penalty before the duties themselves.
CBP treats deliberately misstating country of origin to evade Section 301 or Section 232 tariffs as fraud, the most severe tier, which is precisely the risk the review’s transshipment focus puts under the spotlight.
And CBP audit activity on USMCA origin claims does not pause during political uncertainty; if anything it intensifies, as the US uses compliance pressure as a negotiating tool. The action is therefore identical whatever the annual cycle brings: make sure your existing CoOs are fully documented and defensible now.
The Section 122 and Section 232 Interaction, Now Resolved
One tariff interaction that was uncertain before the review has since been settled, and it changes the landed-cost maths. USMCA-qualifying goods were exempt from the 10% Section 122 surcharge, and there was speculation about what would happen when Section 122 hit its statutory expiry. It expired at 10% on 24 July 2026, but it did not simply disappear: a Section 301 forced-labour tariff of 10% or 12.5% took effect the same moment, and USMCA-compliant goods from Canada and Mexico remain exempt from that replacement too.
There is also a quieter component of that gap that many importers overlook: the merchandise processing fee. Under 19 CFR 24.23, USMCA-qualifying goods are exempt from the MPF, the ad valorem processing charge CBP assesses on most formal entries, even when the general duty rate is already zero.
That means USMCA compliance can pay for itself on goods that were never dutiable in the first place, purely through the MPF saving, which for a high-volume importer accumulates into a real number. It is part of why USMCA utilisation among Mexican exporters climbed from under 45% at the start of 2025 to roughly 85% by early 2026: the compliance effort increasingly pays off even where the headline duty is nil.
So the landed-cost gap between USMCA-qualifying and non-qualifying goods did not narrow as some pre-expiry analysis suggested it might. It persisted, and arguably hardened, because the measure importers avoid by qualifying is now open-ended rather than temporary.
On top of that, Section 232 continues to apply independently to steel, aluminium, and copper at 50% on full customs value, and roughly a third of USMCA-compliant Canadian and Mexican goods still sit under it. Whether the annual review process eventually carves compliant goods out of Section 232 is the single biggest variable in North American landed cost. Our detail is in our analysis of Section 232 tariffs on full customs value and our guide to Section 301 tariffs 2026.
Four Actions Every Importer Should Take Now
- Run a USMCA origin audit across all active entries. Pull every entry where USMCA duty-free treatment is claimed, and for each confirm the supporting documentation: a valid Certificate of Origin covering the shipment period, the regional value content calculation, the Labour Value Content data for automotive goods, and steel and aluminium sourcing records. CBP audit activity is increasing, and the administrative record that exists today is the record you will defend if audited. Our Global Trade Compliance team conducts USMCA origin audits across all three countries and remediates documentation gaps.
- Map your second and third-tier supplier origin, especially Chinese-origin inputs. The Chinese-content risk applies at the component level, not just the finished good. A Mexican manufacturer may source subcomponents from Chinese-affiliated suppliers without your visibility. Map your supply chain to the component level, identify Chinese-origin inputs, quantify their share of regional value content, and know exactly where you stand before thresholds are announced, not after.
- Model your landed cost for your top corridors under the current and tighter-content cases. For each product you import through the US-Mexico or US-Canada corridor, calculate landed cost under the rules in force today and under a stricter-content scenario in which revised thresholds or Chinese-content exclusions cause qualification to fail, adding the 50% Section 232 exposure where applicable. Use our landed cost guide to structure this. The corridor with the highest exposure is the one to build your pricing and procurement buffer against.
- Confirm your importer of record structure can adapt to revised rules. If the annual review produces new rules of origin with new documentation requirements, your importer of record in each country must be able to update compliance documentation immediately when revised standards are published. An IOR with established relationships across CBP, SAT, and CBSA and active USMCA compliance capability provides continuity through the transition. See our explainer on what an Importer of Record is and does.
How Carra Globe Supports USMCA Importers
Carra Globe provides Importer of Record services across all three USMCA member countries through locally registered entities with active customs registrations in the United States, Mexico, and Canada. Our Global Trade Compliance team manages USMCA origin audits across all three jurisdictions, CoO validity reviews against current and anticipated revised thresholds, Chinese-origin content mapping for manufacturers in Mexico, IMMEX compliance documentation support for SAT verification, and landed-cost scenario modelling as the annual review proceeds.
Our Delivered Duty Paid service manages cross-border US-Mexico and US-Canada shipments with USMCA qualification assessment on every entry, and our Freight Forwarding service coordinates North American corridor logistics with integrated USMCA documentation, across 175+ countries. For the parallel Section 301 exposure in sectors under USTR investigation, see our guide to the Section 301 investigations 2026.
Frequently Asked Questions: USMCA 2026 Review
Did USMCA expire on 1 July 2026?
No. The US declined to renew USMCA for a further 16 years, but it did not expire. It remains fully in force through 2036, and the outcome triggered an annual review process rather than termination.
Current preferential tariff treatment continues and importers do not need to change customs filings today. Any party can eventually withdraw on six months’ notice, and if no extension is agreed the agreement expires in 2036, but 1 July was a decision point, not a termination date.
Is my Certificate of Origin still valid after the review?
Yes. Because the agreement stays in force, existing Certificates of Origin remain valid and qualifying goods continue to enter duty-free under current rules. The review did not change the rules or invalidate any CoO.
The forward risk is that thresholds tighten as the annual renegotiation proceeds, likely with a one-to-three-year transition window based on past practice. That window protects compliant declarations but not a CoO already missing documentation, so the priority is ensuring your existing claims are fully documented now.
What does the review mean for goods made in Mexico with Chinese components?
More exposed than most realise. The review confirmed Chinese content as a central US aim: subcomponents from Chinese-affiliated suppliers could be excluded from regional value content, across sectors, not just automotive.
If your Mexican manufacturer sources from Chinese-affiliated suppliers, map those second-tier origins now. You want to know your Chinese-content percentage before USTR sets a threshold, not after, because the negotiating direction is confirmed even though the specific numbers are not.
What is the USMCA automotive rules of origin threshold, and might it change?
Currently 75% regional value content, the strictest of any major trade agreement, plus a 40-45% labour-value-content rule at USD 16 per hour minimum, and 70% North American steel and aluminium.
The US wants these thresholds higher and Chinese-origin components excluded from core parts like engines and batteries, and these are now on the annual negotiating agenda. A growing share of Mexican and Canadian auto imports already pays the MFN rate rather than qualifying, under rules that may get tighter still.
Should I delay expanding my Mexico-based manufacturing?
No, but build it right. The economics of Mexico still work even under the annual-review uncertainty, because China is not getting cheaper: US Section 301 tariffs on Chinese goods remain high regardless.
What you should not do is build an operation that qualifies under today’s origin rules without stress-testing it against tighter thresholds and Chinese-content restrictions. Invest, but design the supply chain for the rules that are likely coming, not only the ones that exist today.
For companies importing automotive parts, electronics, batteries, metals, and manufactured goods across the North American corridor, the annual review has turned one fixed landed-cost number into a moving one, and made USMCA origin and Chinese-content visibility the levers that decide exposure. Carra Globe’s Importer of Record services provide origin audits, Chinese-content mapping, and landed-cost modelling across all three USMCA countries and 175+ markets. With tighter US enforcement also in effect this year, covered in our analysis of the 2026 CBP customs audit landscape, getting the structure right has never mattered more.
This guide is for informational purposes only and does not constitute legal or customs advice. The USMCA annual review process, rules of origin, and Section 232 and Section 301 measures are subject to change as negotiations proceed. Always consult a licensed customs broker or trade attorney before making classification, sourcing, or entry decisions.