The Summer Trade Agenda

Barring another tariff surprise from the administration, the two big trade issues this summer will be the required review of the United States–Mexico–Canada Trade Agreement (USMCA) and the disposition of the Section 122 tariffs and the related Section 301 investigations. This week’s column will make some preliminary observations on both. Future columns will go into greater detail.

USMCA Negotiations

Article 34.7 of the USMCA agreement states in part, “On the sixth anniversary of the entry into force of this Agreement, the Commission shall meet to conduct a ‘joint review’ of the operation of this Agreement, review any recommendations for action submitted by a Party, and decide on any appropriate actions.” The sixth anniversary is July 1, 2026, and the agreement states that there is to be a meeting and decision on that day. The two basic options are to renew the agreement for another 16 years, with or without amendments, or to decline to do that, which triggers a process of annual reviews for up to 10 more years. If the parties agree during that process to renew the agreement, then the 16-year renewal period with six-year reviews starts over.

Recently, the pace of negotiations has picked up, at least with respect to Mexico. Talks were held there last week, and additional talks are scheduled for June 16–17 and July 20. That last date is significant, since it occurs weeks after the July 1 deadline. That suggests Mexico and the United States do not expect to conclude negotiations by July 1, implying that the decision on that date, if there is one, would be to trigger the 10-year review process and finish the talks later. It is also possible the parties may simply ignore the deadline and keep talking—not the first time the administration has ignored an agreement provision. The failure to start talks with Canada adds to the likelihood that July 1 will not be a decision date.

So far, there has been less drama in the negotiations than I expected, probably because Trump is focused on the Iran war, although there is still time for a crisis. There has been some concern that the talks have not been trilateral. This is not (yet) alarming. The existing agreement contains seven U.S.-Mexico side letters and five U.S.-Canada side letters, and the current expectation is that, in the end, there will be a trilateral structure with multiple country-specific provisions.

Last week’s talks focused on rules of origin and manufacturing. Agriculture will be taken up in June. The big rule of origin issue concerns automobiles, and it appears the Trump administration’s opening position is to seek a requirement of 50 percent U.S. content and 82 percent North American content. The former would be new, as there is not currently a specific U.S. content requirement. The latter would represent an increase from the current 75 percent. It is too soon for a definitive analysis of the impact of those requirements, but I have already encountered skepticism that companies will be able to meet them initially. If that is correct, expect the negotiations to include a phase-in period, as was the case with current rules of origin. There is no word on how Mexico reacted to the U.S. proposal, although its government did release a statement saying that talks had been constructive. The other big issues are dealing with the threat of Chinese goods sneaking across the border into the United States and further tightening the labor provisions, as there has been concern that the Rapid Response Mechanism has not been as efficient or effective as it could be. To date, there has been little information on how those issues might play out beyond an oft-repeated demand that Mexico adopt an inbound investment review process as the United States and Canada have done.

Sections 122 and 301

The conventional wisdom has been that the administration will have its Section 301 tariffs in place by July 24 and will not need to ask Congress to extend the Section 122 tariffs, which expire then. Ambassador Jamieson Greer opened the door to speculation about that in an interview with Council on Foreign Relations President Michael Froman when he suggested that it might be possible to impose the Section 122 tariffs again, apparently after a short interval, rather than seeking congressional renewal. That would certainly lead to yet another lawsuit, assuming the tariffs are still in effect at that point. The Court of International Trade has already invalidated them for some plaintiffs, a ruling that will no doubt end up at the Supreme Court, though perhaps not by July 24.

Also waiting in line for future litigation are the likely Section 301 tariffs to be imposed pursuant to the 76 investigations now underway on overcapacity or forced labor. I continue to believe that everybody will be found guilty, and the “remedy” under Section 301 will be the reimposition of the tariffs negotiated last year with the countries being investigated. Since the provision gives the U.S. trade representative wide latitude, the lawsuits will have to argue that the actions in question are not unjustifiable, unreasonable, or discriminatory and do not burden or restrict U.S. commerce. Finding the right plaintiffs and selecting the right countries could be the key to success in court. (For a thoughtful alternative view that argues the courts will invalidate the tariffs for a different reason, see this recent article by Alan Wolff.)

The lesson from all this is that it is going to be a busy summer for both trade negotiators and lawyers, and the result will be more uncertainty for everybody else.

Author’s Note: I retired from CSIS on March 29, 2026. I plan to continue writing this column and participating in the Trade Guys podcast, so please continue to read and listen. However, my CSIS email address will no longer be working, so if readers or podcast listeners want to contact me directly, they should do so at [email protected].

William A. Reinsch is a senior adviser (non-resident) and Scholl Chair emeritus with the Economics Program and Scholl Chair at the Center for Strategic and International Studies in Washington, D.C.