Mexico's auto industry wants a return to zero tariffs on vehicle exports to the US and Canada under a pending update of the free trade agreement (USMCA) between the three countries, but there are concerns about the speed of the talks.
If negotiations succeed, USMCA would be renewed for another 17 years on 1 July 2026 — six years after its launch — a step that industry sources say is critical to restoring investor confidence and unlocking the full potential of nearshoring in Mexico.
Mexico was the largest foreign source of vehicles for the US in 2025, supplying 17pc, or 2.7mn units, of the 16.2mn light vehicles sold in the US, according to automaker association AMIA. Mexico was also the top supplier of auto parts to the US in 2025 and the world's third-largest exporter of light vehicles by value.
Industry representatives say that success now hinges on continuity in the treaty, which remains uncertain as disputes between Mexico, the US and Canada persist. Those concerns were outlined by Mexico's main auto groups at an event in Mexico City this week.
Negotiations are unfolding under a tense US trade backdrop. In March 2025, US president Donald Trump imposed 25pc blanket tariffs on USMCA partners under a national security provision, measures that Mexican automakers are still seeking to unwind.
"There is nothing more important right now than the treaty review and dealing with these tariffs still hanging over us," said Guillermo Rosales, head of auto dealers' association AMDA. "The goal must be to return to zero."
A key point of contention is the treaty's regional value content rules, where light vehicles must contain at least 70pc North American content. That is a threshold more than 90pc of Mexican auto exports to the US already meet, but industry groups are pushing for flexibility for firms still on a compliance pathway.
Heavy vehicle makers are still working to reach compliance. "We are at 64pc regional content and aiming for 70pc by 2027," said Mexico's association of truck and bus manufacturers Anpact head Rogelio Arzarte, noting that sourcing components not currently produced in North America remains complex.
Mexico's industry is also seeking changes to the USMCA's rapid response labor mechanism, arguing it has been applied disproportionately against Mexican facilities.
While talks began early, the process is already slipping. The US trade representative has yet to submit a required report to Congress, raising fears the review could drift toward US midterm elections, prolonging uncertainty and delaying investment.
"I want to be positive," said AMIA head Rogelio Garza. "But it's not going to be easy for some industries, among which I believe we are included."
