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The USMCA Review Will Be a China (and Asia) Policy Test for Mexico

Washington wants Mexico to prove it is not a backdoor for China. But Mexico’s factories still depend on Asian inputs.

From left: Mexican President Claudia Sheinbaum, U.S. President Donald Trump, and Canadian Prime Minister Mark Carney at the Kennedy Center in Washington, DC for the 2026 FIFA World Cup draw.

China will not have a seat at the table when the first joint review of the United States-Mexico-Canada Agreement begins in July 2026. It may still be the country that shapes the outcome most. The pact that replaced NAFTA is officially about rules of origin and labor enforcement. In practice, Washington has turned it into a question about China: whether Mexico can keep serving as North America’s factory floor without becoming a side door for Chinese goods, parts and investment.

At the first joint review – set to begin July 1, the sixth anniversary of the USMCA’s entry into force – the three governments are expected to begin deciding whether the agreement can be extended for another 16 years, or whether the process will slide into a longer period of annual reviews. If they cannot agree, the USMCA does not lapse at once; it would enter a stretch of annual reviews and expire in 2036. 

U.S. Trade Representative Jamieson Greer told Congress in December that a rubberstamp extension would not serve the national interest, and pressed for structural change first.

Washington has been open about its main concern: the United States does not want Chinese firms using Mexico as a platform for duty-free access to the U.S. market. Greer put it bluntly at his confirmation hearing, warning against a setup in which a company could “build a factory in Mexico, assemble it with parts” from China and ship the result north tariff-free. 

The review process has centered heavily on third-country content, rules of origin and economic security, with China looming over each debate. The stakes are high: Mexico is now the United States’ largest trading partner, with its share of U.S. goods imports having climbed to 15.5 percent in 2024. Mexico is trying to do two things at once: convince Washington that it is not a Chinese backdoor while keeping the Asian inputs that make its industry competitive.

Mexico has read the pressure and moved toward Washington’s position. In September, President Claudia Sheinbaum proposed steep tariff increases on imports from countries without a trade agreement with Mexico, a list that includes China but spares the United States, Canada, and Japan. Mexico’s Congress approved the package in December, and on January 1, 2026 Mexico imposed duties of up to 50 percent – the World Trade Organization ceiling – on Chinese cars and goods ranging from auto parts to steel. The measure touched roughly 8.6 percent of Mexican imports and was widely read as an effort to align Mexico with Washington before the review. 

Months before that, Mexico had raised the tax on low-value parcels to 33.5 percent, aimed partly at Chinese e-commerce sites such as Shein and Temu. Beijing protested and urged Mexico to reverse the hikes.

But these efforts can only go so far. The factories that make Mexico indispensable to U.S. supply chains run on imported components, many of them Asian. The trade deficit with China captures that dependence: Chinese exports to Mexico reached nearly $130 billion in 2024 against about $10 billion flowing the other way, a record imbalance. Much of Mexico’s imports from China are intermediate goods that Mexican plants then turn into finished exports. Mexico did not build its export machine with purely North American parts. That is precisely why China’s shadow........

© The Diplomat