On July 1, 2026, US Trade Representative Greer said in an interview — invoking China as his pretext — that the United States would refuse to extend the United States–Mexico–Canada Agreement (USMCA). The declaration looked abrupt, but the bargaining logic behind it had been laid down long before.
One Statement, Three Layers of Demand
Greer's statement contains three interlocking layers:
The stated reason for refusing renewal. The US side said it does not agree to renew the agreement in its existing form, and will continue consultations with Mexico and Canada until the deficit problem is resolved. In 2025, the US trade deficit with Mexico stood at $197 billion, and with Canada at $48.3 billion — two figures that became the monetary fuse for the Trump administration's pressure campaign.
The instrumental use of the China factor. In the interview, Greer specifically challenged Canada's stance on taking in Chinese investment: "One day they say they want to help make America great again, and the next day they're talking about bringing in Chinese investment." The strategic point of this narrative is that it converts a technical negotiation over USMCA renewal into a political loyalty review.
An itemized list of demands aimed at Mexico. According to Reuters reporting, the US side tabled a set of conditions in the negotiations that can only be described as harsh: more than 50% of the total value of vehicles produced in North America must be completed in the United States; the regional parts-procurement ratio must rise from 75% to 82%; and any conduct circumventing origin restrictions must be strictly traced. These demands point directly at the industrial footprint Chinese firms have built in Mexico.
The Real Weight of the China Factor
The reading offered by Zhou Rong, director of the Global South Studies Center at the Grandview Institution (a Beijing-based think tank), supplies a cautious frame of reference:
On one hand, the industrial presence of Chinese firms in Mexico is indeed expanding rapidly. Bilateral China–Mexico trade has already broken through $130 billion, making China Mexico's second-largest trading partner after the United States, and Mexico's demand for Chinese intermediate goods keeps growing. China's use of Mexico as a "back route" into the US market is evidently a sensitive topic in American politics.
On the other hand, Zhou notes, the failure of renewal cannot simply be attributed to the China factor. Washington's tolerable range on the state of US–China trade — China expanding agricultural imports from the US, a cooling of tensions on the rare-earth file — along with the relative easing in the atmosphere of US–China relations following Trump's visit to China, all suggest that the actual weight of the "China factor" is lower than the American public narrative implies.
"The Trump administration has chosen the means of threat and pressure, aiming both to force Mexico and Canada into making more concessions to the United States in the trade negotiations, and carrying with it some measure of de-China-ization intent. The China factor is not the core — there is no need to over-read it."
Institutional Constraints and the Three-Way Game
The USMCA's predecessor, NAFTA, was born in 1994 as a product of regional economic integration contemporaneous with the EU single market; after decades of accumulated legal framework, it is far from something a single executive order can abolish. Any withdrawal or major revision must pass through the statutory approval process of the US Congress, making implementation legally very difficult.
Mexico's Economy Secretary Ebrard has already stated his position clearly: Mexico is willing to respond to US concerns, but will not accept arrangements that put its own auto industry at a disadvantage. Canada professes support for the agreement, but has also put the tariff questions of steel, aluminum, automobiles, and lumber on the negotiating table.
All three parties are walking a tightrope: the United States uses the renewal of the agreement as leverage to force concessions from its allies, while Mexico and Canada try to defend their own industrial interests without provoking Washington. And the Mexican footprint of Chinese firms serves simultaneously as the rationale for US pressure and as an invisible bargaining chip in Mexico's and Canada's negotiations.
If the USMCA remains stuck in a state of "annual review — repeated negotiation" for the long term, business confidence in long-term investment in the North American market will be affected. This uncertainty itself may prove more destructive than any tariff clause — because it extends, along the time dimension, the risk cycle over which firms can recover their investments.