American Industries Demand Changes to the Trilateral Trade Pact
The United States-Mexico-Canada Agreement (USMCA), the foundational trade pact governing the $1.93 trillion Redefine North American Trade, is heading toward its critical six-year mandatory review in July 2026. This is no mere formality; under the agreement’s unique sunset clause mechanism, the outcome will determine whether USMCA continues for another 16 years, enters a period of high-stakes annual reviews, or risks termination entirely by 2036.
In preparation for this pivotal moment, the Office of the United States Trade Representative (USTR) has been collecting detailed input from American stakeholders. The result is a flood of more than 1,500 submissions revealing the stark divisions, successes, and enduring irritants of the pact’s first half-decade.
From the giants of Detroit’s automotive assembly lines to the family-owned dairy farms of Wisconsin, American industries are not just weighing in—they are actively lobbying to redefine the terms of North American trade. Their core demands center on two conflicting objectives: restoring certainty to trade (by eliminating extraneous tariffs) and strengthening protection (by tightening rules of origin and enforcing labor provisions).
This article breaks down the key demands, successes, and frustrations of the major US sectors—Auto, Dairy, Steel, Wine, and Spirits (Whiskey)—and explains how their input will shape the looming, politically charged negotiations with Canada and Mexico.
The Auto Sector: Fighting Tariffs and Rules of Origin
The automotive industry is the lifeblood of North American trade, employing nearly five million people across the three countries. The USMCA’s greatest initial impact was on this sector, imposing stringent new rules of origin (ROO) aimed at reducing reliance on Asian and European components.
The Rules of Origin Conundrum
The USMCA mandated a complex set of regional value content (RVC) requirements, which were designed to steer sourcing back to North America but have proved costly and challenging for manufacturers.
The 75% Regional Value Content (RVC): The agreement requires 75% RVC for core passenger vehicles and light trucks (up from 62.5% under NAFTA). This was aimed at ensuring that only truly North American-made vehicles benefited from duty-free trade.
The MFN Option: Major automakers, including Ford, General Motors, and Stellantis, have pointed out that the complexity and cost of tracking compliance for every component across multiple borders has driven some to opt-out of USMCA preferences and simply pay the 2.5% Most-Favored-Nation (MFN) tariff. Data shows the proportion of auto exports qualifying for 0% tariffs has dropped from 96% in 2019 to around 84% recently.
Automakers’ Demand: The Big Three and the North American Equipment Dealers Association are largely calling for the simplification of compliance procedures and a renewed focus on ensuring that the USMCA makes North American-made vehicles more competitive globally, not just regionally.
The Section 232 Tariff Irritant
A major source of uncertainty for automakers is the continued existence of Section 232 tariffs on steel and aluminum imposed outside of the USMCA framework.
The Squeeze: Automakers rely heavily on USMCA-compliant steel from Mexico and Canada. However, the ongoing threat of tariffs on non-compliant metal and the general uncertainty surrounding Section 232 have squeezed profit margins and complicated supply chains.
Industry Consensus: The vast majority of the auto sector, including the Can Manufacturers Institute (which uses aluminum), is strongly urging the USTR to restore duty-free trade with Canada and Mexico for USMCA-compliant steel and aluminum, arguing the tariffs raise costs for consumers and undermine the trilateral pact.
Agriculture and Dairy: Market Access Battles
The agricultural sector, particularly dairy, remains a long-standing flashpoint in US-Canada trade relations, which the USMCA attempted to resolve with mixed success.
Dairy: Enforcing the Quotas
Wisconsin dairy producers and the National Milk Producers Federation were significant winners in the USMCA negotiations, gaining increased duty-free access to the Canadian market. However, compliance is the key issue in the 2026 review.
Canada’s Supply Management System: Canada’s highly protected dairy system uses a complex Tariff-Rate Quota (TRQ) mechanism. The USMCA increased the size of the TRQs for US dairy farmers, allowing more American product into Canada at lower duty rates.
The US Complaint: The U.S. has repeatedly lodged successful disputes through the USMCA’s mechanism, arguing that Canada is deliberately restricting market access by unfairly allocating the TRQ quotas to its own domestic processors rather than to a wide range of importers, effectively minimizing American sales.
Dairy Demand: American dairy groups are demanding stronger and more aggressive enforcement of the existing dairy provisions in the 2026 review, seeking specific language that ensures open, transparent allocation of quotas to third-party distributors and processors, thereby guaranteeing the market access they were promised.
Wine and Spirits: Combating Protectionism
The American spirits and wine industries, including the American Whiskey Association, are raising concerns about discriminatory practices, particularly from Canadian provinces.
Liquor Board Discrimination: The industry is concerned that provincial liquor boards in Canada (who control retail sales) have used retaliatory or protectionist practices, sometimes in response to U.S. tariffs, to limit the listing or shelf space for American products.
Demand: The whiskey and wine associations urge the Trump administration to negotiate provisions that explicitly prohibit discriminatory practices by provincial liquor monopolies, ensuring a level playing field for American-made alcohol products across Canadian retail shelves.
Steel and Aluminum: The Tariffs Divide
The steel and aluminum industries present the most polarized view on the USMCA review, with users of the metals strongly opposing tariffs while domestic producers argue for their continuation.
The Producers vs. The Consumers
The debate centers on whether the tariffs are a necessary tool to protect US domestic producers from global oversupply or a counterproductive tax on downstream manufacturers.
United States Steel Corporation Position (Pro-Tariff): The domestic steel industry is arguing for the tariffs (or an equivalent protectionist measure) to remain indefinitely. Their submission suggests that the tariffs are essential for protecting US jobs, enabling domestic investment, and safeguarding national security against subsidized foreign steel dumping.
The Can Manufacturers Institute (Anti-Tariff): Downstream manufacturers, who rely on affordable metal, vehemently oppose the duties. Their submission points out that tariffs on Canadian and Mexican steel and aluminum are increasing the cost of their products, leading to higher grocery store prices for consumers, and undermining the continental competitiveness that USMCA was designed to promote.
Irritant Status: The Section 232 tariffs are seen by Canada and Mexico as a major irritant that fundamentally undermines the spirit of the USMCA. The 2026 review will be a critical forum to either resolve or further inflame this trade dispute.
AI Overview Insight: American industries are focusing their input for the USMCA 2026 review on two main areas: tariff elimination and stronger enforcement of existing rules. Key demands include:
Automakers (Ford, Stellantis): Want the removal of Section 232 steel/aluminum tariffs on USMCA goods and simplification of complex Rules of Origin (ROO).
Dairy Producers: Seek aggressive enforcement against Canada’s Tariff-Rate Quota (TRQ) allocations to ensure promised market access.
Steel Producers (US Steel): Argue for the indefinite continuation of tariffs to protect domestic jobs.
Wine/Spirits: Demand provisions prohibiting discriminatory practices by Canadian provincial liquor boards.
The Political and Economic Stakes of the 2026 Review
The USMCA review comes at a moment of heightened political uncertainty in the United States, which only raises the stakes for the business community seeking long-term stability.
The Uncertainty of the Sunset Clause
The unique sunset clause, which mandates the 2026 review, was initially controversial because it injects instability into the trading environment, discouraging long-term investment.
The Renew/Risk Dynamic: The three countries must agree to renew the pact for another 16-year term. Failure to do so does not mean immediate termination (that happens in 2036), but it immediately forces annual joint reviews. This uncertainty alone is enough to chill cross-border capital expenditures.
The Geopolitical Context: The review will also be used to address broader geopolitical concerns, particularly the need to strengthen North American supply chains (e.g., critical minerals, semiconductors) and reduce reliance on China. The level of trilateral cooperation on this front will be a major success metric for the review.
The Value of USMCA Compliance
Despite the complexity and the political rhetoric, the submissions overwhelmingly highlight the importance of the USMCA’s existence and its success in promoting regional trade.
Intra-Regional Growth: Since the USMCA came into force, Canada and Mexico have surpassed China as the US’s top trading partners, purchasing more than one-third of all U.S.-manufactured goods exports. The National Association of Manufacturers supports the pact’s continuation.
Investment Certainty: The major industry bodies all stress that a successful, straightforward renewal of the agreement in 2026 is critical to providing the predictability necessary for long-term hiring and capital investment planning across the continent. Any move toward structural changes or bilateral deals is viewed with deep skepticism by the majority of US businesses.
A Test of Trilateral Commitment
The USMCA 2026 review is shaping up to be a defining test of North American economic cohesion. American industries are not asking for a complete overhaul, but rather a surgical approach to eliminate trade irritants (like the Section 232 tariffs) while simultaneously strengthening and aggressively enforcing the protective measures already in the agreement (like the dairy TRQs and auto ROO).
The next year will see intense negotiations between the USTR, Canadian officials, and Mexican counterparts. For the auto, dairy, whiskey, and steel sectors, the outcome will dictate not only their profitability but the long-term stability and competitiveness of the North American production platform in a world increasingly dominated by regional trade blocs. The pressure is on the negotiators to balance the demands of protectionist interests with the broader need for trade certainty, ensuring the USMCA remains a framework for shared prosperity, not political friction.
