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 could still be the country that most shapes the outcome. The agreement that replaced NAFTA officially deals with rules of origin and labor enforcement. In practice, Washington has made this a China question: Can Mexico continue to serve as a factory in North America without becoming a gateway for Chinese products, parts and investments.
At first joint review – scheduled to begin on July 1, the sixth anniversary of the entry into force of the USMCA – the three governments are expected to begin deciding whether the agreement can be extended for another 16 years, or whether the process will extend over a longer period of annual reviews. If they fail to agree, the USMCA does not immediately become obsolete; it would enter a series of annual reviews and expire in 2036.
U.S. Trade Representative Jamieson Greer told Congress in December that a Expanding the buffer would not serve the national interestand insisted on structural change first.
Washington has been open about its main concern: The United States does not want Chinese companies to use Mexico as a platform for duty-free access to the American market. Greer put it bluntly during 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 without customs duties.
THE the review process focused heavily on content from third countries, rules of origin and economic securitywith China dominating every debate. The stakes are high: Mexico is now the United States’ largest trading partner, its share of American imports of goods having increased. 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 retaining the Asian inputs that make its industry competitive.
Mexico understood the pressure and moved closer to Washington’s position. In September, President Claudia Sheinbaum proposed steep tariff increases on imports from countries without a trade deal with Mexico, a list that includes China but spares the United States, Canada and Japan. The Mexican Congress approved the package in December, and on January 1, 2026, Mexico imposed duties of up to 50 percent – the World Trade Organization cap – on Chinese cars and products ranging from auto parts to steel. The measure affected about 8.6 percent of Mexican imports and was widely read as an effort to align Mexico with Washington ahead of the review.
A few months earlier, Mexico increased the tax on low-value parcels at 33.5 percentaimed in part at Chinese e-commerce sites such as Shein and Temu. Beijing protested and urged Mexico to reverse its hikes.
But these efforts can only go so far. The factories that make Mexico indispensable to U.S. supply chains operate with imported components, most of them from Asia. The trade deficit with China reflects this dependence: Chinese exports to Mexico reached nearly $130 billion in 2024, compared to about $10 billion in the other directiona record imbalance. A large portion of Mexico’s imports from China are intermediate goods that Mexican factories then turn into finished exports. Mexico did not build its export machine with purely North American parts. This is precisely why the shadow of China looms over the USMCA review.
The balancing act is more difficult because Asia is not limited to China. Mexico’s electronics exports to the United States growing rapidly rely on pieces of South Korea, Taiwan, Japan and, increasingly, Southeast Asia: Vietnam, Malaysia and Thailand. January’s tariffs attracted several of these partners to China’s side: South Korean, Indian and Taiwanese suppliers If the USMCA review tightens rules of origin or adds China-specific content limits, the restrictions will not stop at Chinese inputs; they would capture the broader network of Asian suppliers on which North American manufacturing depends.
Mexico is linked to the Pacific twice, by agreement and by manufacturing industry. Mexico is a founding member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free trade agreement linking it to Japan, Vietnam, Malaysia, Singapore and Australia. Its supply chains in practice link it to Asian production.
Washington is now asking Mexico to treat part of this same Pacific network as a security risk. THE “fortress North America“The rhetoric gaining traction in U.S. trade circles and the transshipment sanctions enshrined in the 2025 Washington Accords with its Asian partners are pushing the region toward exclusion at the very moment when Mexico can least afford to sever those ties.
The “China backdoor” argument is more complicated than Washington’s rhetoric suggests. A Federal Reserve study released in June found that direct Chinese transshipment explains only about 1 percent of the growth in Mexican exports to the United States since the 2018-19 tariff war, with Chinese production in Mexico adding about 14 percent. Chinese inputs account for only 2 to 3 percent of recent growth in manufacturing exports. Brookings find that the North American value reached about 74 percent of Mexico’s manufactured exports to the United States in 2024, and that Chinese exports to Mexico actually fell by about 1 percent in 2025.
Greer himself credits Mexico with absorbing about a quarter of the reduction in the US deficit with China. Yet suspicion of large-scale rerouting drives policy: In Washington, the perception of a backdoor has become more powerful than its measured size. It is this gap between perception and evidence that makes examining the USMCA so difficult.
Mexico will need to put in place credible tools – clear rules of origin, traceability of inputs, tighter investment controls – that assuage U.S. security concerns without stifling the supply chains that employ its workers. The cost of a mistake is already visible. BYD, the Chinese electric vehicle giant, abandoned its Mexican factory project in July 2025, citing geopolitical pressures, before the project reaches a final investment decision. The forces behind this withdrawal will now go through the revision of the USMCA.
If Mexico can secure an extension while keeping its Pacific commitments and non-Chinese Asian supply lines intact, it will have demonstrated that North American discipline and trans-Pacific openness can coexist. If the renewal of the USMCA instead requires Mexico to adapt its foreign trade policy to the US campaign to contain China, the revision will mark the moment when North America transforms its trading bloc into an instrument of decoupling.
Regardless, the review assesses whether the region can become more resilient without becoming a wall against Asia. It is in Mexico that this contradiction will be tested first.