The T-MEC Review Process: An Overview
According to Article 34.7 of the United States-Mexico-Canada Agreement (T-MEC), Mexico, the United States, and Canada are required to meet on July 1, 2026, marking the sixth anniversary of the agreement’s enactment. The purpose of this gathering is to assess the T-MEC’s performance and decide whether to extend its validity for another 16 years.
Anticipated Review and Public Consultations
With the review date approaching, discussions have emerged about a “preemptive review.” The United States plans to initiate public consultations in October 2025. As per the USMCA Implementation Act, which ratified the T-MEC in the United States, the US Trade Representative (USTR) must start these consultations 270 days before the trilateral review begins, setting October 4, 2025, as the deadline.
Furthermore, the USTR is obligated to submit a report to the US Congress 180 days before the review commences, detailing their evaluation, recommendations, and stance on extending the T-MEC. This report is due by January 3, 2026.
Mexico’s Preparations
Unlike the United States, Mexico lacks a formal equivalent mechanism for public consultations. However, Mexico has already begun preparatory meetings with the private sector and various business chambers.
Historical Context: Trump’s Trade Policies
In March 2019, former President Trump imposed a general 25.0% tariff on Mexico and Canada, later exempting products and goods adhering to the T-MEC’s rules of origin. These tariffs, along with a 25% automotive sector tariff and 50% steel and aluminum tariffs on Mexican imports, were justified by Trump’s claims that:
- Mexico exploits the United States, leading to an unfair bilateral relationship.
- China uses Mexico as a gateway to the US market.
In 2024, the US trade deficit with Mexico reached $171.8 billion, the second-highest after China and accounting for 14.3% of the total.
Trump argued that these tariffs would encourage US companies to bring back factories from Mexico, fostering employment and investment.
Key Areas of Focus for the T-MEC Review
Five critical areas are expected to be addressed during the T-MEC review:
- Strengthening regional integration through stricter rules of origin.
- Implementing sector-specific rules to limit China’s presence in the North American market.
- Enhancing the Rapid Response Mechanism’s scope and application.
- Adjusting labor provisions, especially wages.
- Incorporating clauses to bolster investment legal certainty.
Potential Impact on Mexico’s Economy
Although these potential T-MEC changes may pose short-term challenges for Mexico’s economy, such as increased customs requirements and production cost hikes, they also present opportunities for growth.
- If Mexican companies successfully capture a significant portion of the market share left by Asian firms in the region due to protectionist trade policies, production, profits, and employment could increase.
- Adjustments to the Rapid Response Mechanism and enhanced legal certainty would further support nearshoring and Plan Mexico, fostering a more favorable business environment.
Key Questions and Answers
- What is the T-MEC review process? The T-MEC review process requires Mexico, the United States, and Canada to meet every six years to assess the agreement’s performance and decide on its extension.
- When is the next T-MEC review scheduled? The next T-MEC review is set for July 1, 2026.
- What are the key areas of focus for the review? The five main areas include stricter rules of origin, sector-specific rules to limit China’s market presence, adjustments to the Rapid Response Mechanism, labor provisions, and investment legal certainty.
- How might the T-MEC review impact Mexico’s economy? Despite potential short-term challenges, the review presents opportunities for growth through increased market share capture and a more favorable business environment.
