News / Uncertainty across borders as hopes for USMCA renewal fade

Hopes for an agreement between administrations in  Washington, Ottawa and Mexico City to extend the USMCA trade pact before 1 July are fading fast, auguring ongoing uncertainty that affects trade and investment decisions.

At least the US and Mexican governments are talking about the issue, and they appear to have made some progress in unravelling the fallout from their dispute over airline access to Mexico City’s airports.

Companies in the region are getting nervous as the 1 July deadline for USMCA renewal looms. The national associations of electrical manufacturers from all three nations have jointly written to the three trade ministers asking them to “finally unleash the USMCA’s potential”.

Not only do they find the trade framework important and helpful, they want to strengthen it. Their letter calls for harmonisation of technical standards, and urges the administrations to consult with industry on changes to rules of origin.

In addition, they stressed the importance of preserving the current three-nation structure rather than change to the bilateral agreements Washington has threatened.

“Decisive action to renew the USMCA is critical in the face of global competition, including state-subsidised firms in Asia,” they wrote.

Other interest groups, including the National Foreign Trade Council and US Chamber of Commerce, have also appealed to the governments to renew the agreement.

But apparently these efforts may be to no avail. At an economic forum in Mexico City, the nation’s economy secretary, Marcelo Ebrard, warned of a lasting limbo.

“I would be thinking that this review is going to last a little longer, and probably lead to non-conclusive reviews over the next ten years,” he said.

If the agreement is not renewed by 1 July, it will become subject to an annual review process, unless one party decides not to continue and serves six months’ notice of its decision to walk away from USMCA.

The US president, who had celebrated the agreement as a historical success when it was signed during his first spell in the White House, has indicated that he might opt for separate bilaterals.

Whereas Ottawa and Washington have not held any formal talks on the issue, the Mexican government started technical discussions of the framework with the US administration in March. Washington has praised Mexico’s tariffs on nations including China and Vietnam that came into effect in January, but has said it wants to see stricter rules of origin and tougher enforcement rules.

Mexico cemented its status as the top US trading partner this year, ahead of Canada and China, with a 7.4% year-on-year rise in northbound flows in Q1, while traffic in the opposite direction grew 10.97% in value.

It has also been one of the top destinations for foreign direct investment. Its ascent from 25^th to 19^th in Kearney’s 2026 Foreign Direct Investment Confidence Index has been attributed chiefly to near-shoring.

Hence the prospect of a prolonged limbo of USMCA, and the associated uncertainty, would be a drag on future investment in the nation. Morgan Stanley and Kearney have both described the USMCA negotiations as pivotal for investment flows into Mexico. The former noted that clarity around rules of origin and tariffs could unlock delayed investment and accelerate near-shoring into Mexico.

Meanwhile, air cargo (and passenger) flows between Mexico and the US seem to be progressing towards more services, as their transport departments have reported progress on settling their dispute over take-off and landing slots at Mexico City’s Benito Juarez airport (AICM).

To cope with chronic congestion, the Mexican authorities reduced the number of slots at the airport and banished all freighter operations to the capital’s Felipe Angeles International airport (AIFA). As this reduced some landing slots of US passenger airlines and forced US integrators to AIFA, Washington cried foul and cut 13 existing or planned transborder routes for Mexican airlines and ordered the dissolution of the Delta-Aeromexico joint-venture.

Following the reinstatement of the US passenger airline slots at AICM, the two sides have held talks that led to an agreement on conditions of the use of AIFA and AICM regarding cargo. According to US transport secretary Duffy, they reached “consensus on a path to get Mexico to comply with the 2015 aviation bilateral”.

Mexico’s Secretariat of Infrastructure, Communications and Transport said the two sides “established conditions to guarantee equal and transparent access to AICM and AIFA”.

While this signals some progress, it does not lift the US ban on Mexican airlines. Mr Duffy needs to see first “that promises are converted into actions”. Until then the restrictions on Mexican carriers remained in place, he said.

Notwithstanding the uncertainty and the bumps in the two governments’ communication, US logistics firms continue to expand their reach into Mexico.

Lately intermodal appears to be a strong suit to play. US trucking firm Werner is doubling its intermodal cross-border operation using proprietary containers from 400 to 800 units by year end. Management stressed that this allowed clearance of freight at origin and avoided congestion at the border.

Last month, Class I rail carriers CSX and CPKC upgraded their South-east Mexico Express with a dedicated train and faster transit times. BNSF has also expanded its intermodal service into Mexico.