USMCA September 2026 Update: What Manufacturers Need to Know

USMCA Watch: 7 Things That Have Changed Since the July 1 Non-Renewal

When the USMCA’s Free Trade Commission met on July 1, the U.S. declined to confirm a 16-year extension of the agreement, while Mexico and Canada both said they were ready to renew it as-is. That kicked off an annual joint-review process that could run through 2036 — and in the eight weeks since, the picture has moved quickly on one track and badly deteriorated on the other. Here’s what’s new.

As of September 4, the U.S.-Mexico track still appears to be moving forward, while the U.S.-Canada track remains the more adversarial side of the review. Canada has now published an updated complete list of U.S. products subject to counter-tariffs effective September 8, while Canada-U.S. talks still appear stalled. On the Mexico side, the next concrete checkpoint remains the Washington round, where autos, steel, aluminum, rules of origin, and tariff relief are expected to stay central.

• Mexico and the U.S. have knocked a 54-item list down to 14. The U.S.-Mexico track has been the most active. After bilateral rounds in May, June, and a third round in Mexico City (July 21–23) that included a meeting between Ambassador Jamieson Greer and President Claudia Sheinbaum, Economy Secretary Marcelo Ebrard said the U.S. list of trade “irritants” had shrunk from 54 items to just 14. The talks covered automotive rules of origin, steel and aluminum, economic security, labor, agriculture, and electronic payment services. A fourth round is now set for Washington in early September.
• Autos remain the biggest unresolved fight with Mexico. The core sticking point hasn’t moved: Washington wants a 50% U.S.-specific content requirement for vehicles to qualify for preferential USMCA access, which Mexico is resisting as both commercially damaging and a precedent that could tighten further over time. Mexico is linking any concessions on content rules to relief from existing U.S. Section 232 tariffs on autos (25%) and steel/aluminum (50%). Neither side had resolved this heading into the September round.
• The U.S. hit Canada with a rarely used tariff weapon — and talks collapsed. This is the biggest escalation since July 1. On July 20, President Trump invoked Section 338 of the Tariff Act of 1930 — never before used this way by any president — to impose 50% tariffs on Canadian goods (autos, alcohol, dairy-adjacent products, plus items like hockey sticks and cement), citing Canadian trade practices Washington calls discriminatory. Notably, these tariffs apply regardless of USMCA-origin status. After a brief pause and last-minute talks, negotiations broke down on August 21; Prime Minister Mark Carney suspended talks and recalled Canada’s negotiating team, calling U.S. demands “uneconomic” and “unfair.” The 50% tariffs took effect August 22, and Carney says Canada will match them dollar-for-dollar.

In dollar terms, the U.S. duties now cover about $27.6 billion worth of Canadian goods, or roughly 5% of Canada’s total annual exports to the U.S. — a figure that grew from USTR’s initial ~$20 billion estimate as the affected product list was finalized. That still leaves the large majority of Canada-U.S. trade untouched for now: an estimated 81–85% of Canadian imports continue to enter the U.S. duty-free under existing USMCA preferences.

Canada’s countermeasures cut the other direction, hitting U.S. goods entering Canada, and are set to take effect September 8 across roughly $27.6 billion (also cited as ~$20 billion by some outlets) in American products. The Canadian schedule runs on a three-tier structure — 50%, 25%, and 15% — with the highest rate reserved for the sectors Ottawa considers most exposed. The five hardest-hit categories, compared with where each stood before this escalation:

Canada has now published an updated complete list of U.S. products subject to these counter-tariffs, confirming the September 8 effective date and the 15%, 25%, and 50% rate structure. Canada has also opened a remission-request process for affected importers, which matters because some companies may seek case-specific relief even as the broader dispute remains unresolved.

• Steel and aluminum products — 50% now, up from 25%. Rods, bars, sheets, wire, foil, and derivative goods like prefabricated bridges, towers, and door/window frames; this doubles the 25% counter-tariff Canada had kept in place on these goods since March 2025.
• Furniture — 50% now, up from 0%. Furniture was part of the broad March 2025 counter-tariff list that Canada rolled back on September 1, 2025; it re-enters the list at the top rate.
• Clothing and apparel — 50% now, up from 0%. Also rolled back in September 2025 along with the rest of the original broad-based list, apparel returns as one of the newly targeted, top-tier categories.
• Dairy products — 25% now, up from 0%. Cheese (cheddar, mozzarella, brie, Parmesan, and others), milk and cream powders, whey, and other milk-protein products; note that USMCA quota-free access still applies below existing tariff-rate-quota thresholds, with the new duty applying to over-quota volumes.
• Appliances and fish/seafood — 25% now, up from 0%. Like furniture and apparel, these sat outside Canada’s counter-tariff regime between the September 2025 rollback and this new package.

Everything else on the roughly 700–900-item list — including agricultural equipment, pulp and paper goods, plastics, and electronics — falls into the 15% tier, also newly added. By contrast, Canada’s separate counter-tariffs on U.S. autos, which were never rolled back, hold steady at 25% both before and after this round. In short: heading into July 1, Canada’s only active counter-tariffs were on steel, aluminum, and autos (all 25%); the September 8 package roughly doubles the rate on steel and aluminum and reintroduces tariffs — from a baseline of zero — across a much wider set of goods.

• Canada still hasn’t opened formal USMCA-review negotiations. Unlike Mexico, Canada has not begun a substantive, text-based bilateral negotiating round tied to the joint review itself — engagement has largely been calls and meetings between Trade Minister Dominic LeBlanc and Ambassador Greer, plus the now-collapsed talks around the Section 338 tariffs. Canada has consistently pushed to keep the process trilateral rather than splitting into separate U.S.-Mexico and U.S.-Canada tracks, a preference Mexico shares but Washington has not adopted.

As of September 4, there is no clear evidence of a resumed formal Canada-U.S. negotiating track. Carney used a September 3 public speech to reiterate that Canada had suspended trade negotiations two weeks earlier and that the U.S. tariffs had been imposed. That reinforces the split between the moving U.S.-Mexico track and the stalled U.S.-Canada track.

• USTR is now talking about “interim arrangements” rather than a full deal in 2026. Testifying before the Senate, Ambassador Greer said he’s aiming for interim trade arrangements with both Mexico and Canada by the end of 2026, with the harder structural issues — automotive content, labor, environment — pushed into 2027. That timeline was echoed by outside analysts: one trade-focused newsletter described the most likely path as a “painful” extension of talks into late 2026 or beyond.
• A separate forced-labor tariff action touched both countries — but Mexico says it barely matters. USTR finalized a Section 301 forced-labor enforcement action covering 60 economies, including both Mexico and Canada. Mexican officials said the action would produce no practical change for Mexico’s exporters, since USMCA-compliant goods — an estimated 85% of Mexican exports to the U.S. — remain exempt as long as they satisfy rules of origin. No comparable reassurance has come from Canada, where the forced-labor action lands on top of the Section 338 tariffs and the collapsed talks.
• The uncertainty is already showing up in investment data. Foreign direct investment in Mexico is down roughly 10% year-over-year amid the drawn-out review. In Canada, a KPMG poll found 42% of manufacturers have shifted or are planning to shift production to the United States, and 57% have paused or cut capital spending because of the uncertainty. None of this reflects a change in the underlying legal status of USMCA — the agreement remains fully in force for both countries — but it shows companies aren’t waiting for a final outcome to start adjusting supply chains.

What’s Still Left to Resolve

• A U.S.-Mexico deal on autos, steel, and aluminum — the September round in Washington is expected to be the crucial test of whether the two sides can close the gap on content rules and tariff relief.
• Any formal negotiating track with Canada — talks need to restart before Canada’s core USMCA-review issues (steel, aluminum, auto tariffs, softwood lumber) can even be substantively negotiated, separate from the Section 338 dispute.
• Whether the process re-consolidates into trilateral talks, as Mexico and Canada both prefer, or stays split into two bilateral tracks, which is where Washington has kept it so far.
• The legal fate of the Section 338 tariffs themselves — trade lawyers expect litigation in the U.S. Court of International Trade over whether Section 338 was properly invoked and whether it is superseded by Section 301, since Section 338 had never been used this way before. As of September 4, the legal questions have sharpened, but no formal court challenge has been publicly reported.
• The full structural rework of USMCA (automotive rules of origin, labor, environment) that Greer has signaled will likely slip into 2027 even if interim arrangements are reached this year.

What Analysts Are Watching Next

Trade watchers are largely converging on a few themes. Some current and former officials, including former Congressman Kevin Brady, argue the U.S.-Mexico track “is not in bad shape” despite the slow pace, noting that each round has narrowed the list of open issues. Law firms tracking the Canada dispute are flagging the Section 338 tariffs as a genuinely novel legal test case, given the provision’s history and the pending question of whether the U.S. International Trade Commission needed to investigate first. On the broader outlook, most analysts expect the two-track approach to persist through the rest of 2026, with Mexico’s September round in Washington remaining the next concrete checkpoint as of September 4. Canada’s path forward still depends first on whether Ottawa and Washington can get back to the table after the August breakdown.

Bottom line: As of September 4, the agreement remains fully in force and the U.S.-Mexico track is still grinding forward with real, if incomplete, progress. The U.S.-Canada relationship remains openly adversarial, with Section 338 tariffs in effect, Canada’s counter-tariffs scheduled for September 8, and no clear public date for talks to resume.

An Invitation from Prince Manufacturing

For manufacturers evaluating how USMCA uncertainty could affect sourcing, shelter manufacturing, or a Mexico operating model, Prince Manufacturing can help think through the practical questions: contract manufacturing versus shelter, U.S. versus Mexico production, hybrid operating models, landed cost, logistics, and readiness for compliance discussions. For additional information about USMCA-related manufacturing considerations or manufacturing in Mexico, contact us.

This article reflects developments reported through September 4, 2026. Given the pace of change on both tracks, readers should confirm current tariff and negotiation status before making sourcing or compliance decisions.