by Pamela K. Starr, Professor of the Practice of Political Science and International Relations, USC Dornsife College of Letters, Arts and Sciences
Most Americans understand that their avocado toast and Super Bowl guacamole depend on a green fruit imported from Mexico. But few realize that Mexico is the United States’ top trading partner, both as the largest source of U.S. imports and the largest market for its exports.
Mexico supplies everything from fruits and vegetables to computers, medical equipment and electrical machinery — not to mention vehicles and auto parts. Mexico is also the top consumer of U.S. exports, ranging from corn, pork and dairy products to natural gas, to auto parts.
Given these ties, the stakes will be high on July 1, 2026, when U.S., Mexican and Canadian trade negotiators begin a required trilateral review of the 2020 trade deal underpinning this relationship. But a de facto stalemate is likely, resulting in uncertainty that will dampen growth in all three member countries. Meanwhile, consumers will have to keep paying the tab for imports affected by Trump’s tariffs.
The countries have to review the deal after six years. Potential outcomes of the 2026 negotiation round range from renewing the deal in full for 16 more years, ending it altogether or agreeing to undergo a series of annual reviews that could extend it through 2036.
Given the three countries’ supply-chain integration, preserving predictability in trade and investment through a successful review should be a slam-dunk case. But that outcome looks unlikely for three reasons.
First is Trump’s abhorrence of trade deficits, stemming from his belief that they’re caused by U.S. production and jobs moving overseas due to unfair trade practices. While this argument applies to U.S.-China trade to a certain degree, it does not to Mexico. For example, 30% of Mexican-manufactured exports to the U.S. include U.S. content, a share that rises to 40% for vehicles. The effect of these integrated supply chains is to create jobs rather than replace them.
The persuasive power of tariffs also persists in Trump’s thinking — he has no incentive to ink a trade agreement that limits his power to impose tariffs at will. He restated this indifference in June 2026, when he asserted that he wasn’t “looking to renew” the pact because he believes the U.S. would do better without it. “We don’t need anything that Canada has,” he added. “We don’t need anything that Mexico has, but they need everything that we have. They have to treat us better.”
Mexico needs investors to have the certainty provided by a successful review. But without knowing the future rules of the road, investors are sitting on the sidelines, which is weakening the country’s growth strategy tied to nearshoring. As a result, Mexico has focused on preserving the 2020 agreement — even if this means a more ad hoc cycle of annual reviews — because it still guarantees a lower tariff rate compared with what other countries face with Trump in the White House.
This article is republished from The Conversation under a Creative Commons license.
