The Trump administration plans to initiate negotiations to renegotiate the U.S. trade deal with Canada and Mexico ahead of the mandated review in 2026. This move aims to protect U.S. auto jobs and address the growing presence of Chinese companies in the Mexican auto sector, according to sources familiar with the discussions.
The U.S.-Mexico-Canada Agreement, signed by Mr. Trump in 2020, stipulates a “joint review” of the deal after six years, scheduled for July 1, 2026. However, the administration intends to commence negotiations earlier than this timeline, as per anonymous sources.
Officials are particularly focused on strengthening the pact's regulations regarding the auto industry to deter manufacturers from relocating outside the U.S. They also aim to prevent Chinese firms from exporting vehicles and auto parts to the U.S. through Mexican factories.
Mr. Trump has indicated the possibility of imposing a 25 percent tariff on goods from Canada and Mexico, citing concerns over drug and migrant flows across the U.S. borders. He mentioned plans to move forward with these tariffs starting February 1.
Members of the Trump administration believe that Mexico has been infringing upon a separate agreement to limit metal exports to the U.S. and are eager to demonstrate to the Mexican government their commitment to addressing such trade violations.
Reports indicate that Mr. Trump is advocating for an expedited renegotiation of the North American trade deal. While the three countries are required to meet to discuss the terms six years after the agreement took effect, experts anticipated that the Trump administration would accelerate this process.
Initially, Mexico and Canada sought to postpone discussions for six years, believing it would allow them to navigate a potential second Trump administration. However, the upcoming negotiation requirement will now fall under Mr. Trump’s administration.
Mr. Trump has been critical of the previous trade agreement, the North American Free Trade Agreement, and his administration sought to replace and update it through the new deal. Key changes included increasing the percentage of a vehicle's content that must be produced in North America to qualify for zero tariffs, as well as requiring car manufacturers to use more North American metal and higher-paid labor.
However, Mr. Trump and his advisors now contend that these regulations have not adequately prevented manufacturers from relocating factories abroad. They are particularly concerned about the influx of affordable and high-quality Chinese vehicles into Mexico and the establishment of Chinese auto factories in that country.
During a speech at the Detroit Economic Club in October, Mr. Trump remarked that “Mexico is becoming the second China,” expressing concerns about the potential loss of U.S. car manufacturing.
Sources have cautioned that these plans may still evolve. It remains unclear whether Mr. Trump’s tariff threats serve as a negotiating strategy to gain concessions from Canada and Mexico or if he intends to impose them unilaterally. The Trump administration’s press office did not respond to inquiries for comment.
On Monday evening, Mr. Trump signed an executive order directing various agencies to examine a range of trade issues. While he did not impose any new tariffs immediately, the order sets the stage for potential trade actions in the coming months.
One aspect of the order requires trade officials to evaluate the impact of the North American trade deal on workers, farmers, and businesses, as well as to make recommendations regarding U.S. participation in the agreement. It also instructs officials to begin gathering public comments in preparation for the 2026 review of the trade deal.