Overview
- The third bilateral round in Mexico City ended this week with negotiators agreeing to a fourth round in early September in Washington to press for partial deals before year‑end.
- The main dispute is over automotive rules of origin: the USTR floated a U.S. 50% vehicle‑value floor while Mexico says it will only accept tougher content rules if they remain regional and has offered higher regional content levels as a condition.
- Mexico has pressed for removal of U.S. Section 232 steel, aluminum and 25% auto tariffs as part of talks, but Washington has not signaled willingness to lift them and Mexico is waiting for U.S. August Section 301 and excess‑capacity rulings before advancing some items.
- Policy signals are already shifting industry plans: Toyota confirmed a $3.6 billion San Antonio expansion that will gradually move some Tacoma output from Baja California to Texas and President Trump has publicly credited tariffs with bringing some auto production back to the U.S.
- The stakes are large because Mexico sent over 84% of its non‑oil exports to the U.S. in H1 2026 and 149,000 U.S. firms rely on trade with Mexico and Canada, so delayed resolution could reshape supply chains, investment and jobs into 2027.