Brookings: Tariffs Reshape USMCA Review

A Brookings report examines the impacts of President Donald Trump’s expanded tariff regime on Rules of Origin and the USMCA renegotiation next year.

Steep tariffs on Chinese imports—peaking at 145% before a temporary reduction to 115%—alongside 25% tariffs on non-U.S. auto content from Canada and Mexico, and global duties on steel, aluminum have increased the stakes for the coming negotiations.

USMCA-compliant imports from Canada and Mexico remain largely duty-free, but new tariffs on non-U.S. content conflict with USMCA rules of origin (ROOs), potentially shifting auto manufacturing to the U.S.

Author Joshua Meltzer cautions the policy could raise costs, reduce innovation, and prompt retaliation from China and the EU.

The report warns of heightened incentives for tariff circumvention through Mexico and Canada, particularly by Chinese exporters. It urges tighter trilateral cooperation on investment screening and enforcement.

Brookings outlines three paths for the 2026 USMCA review:

• retaining current ROOs,
• adopting the U.S. interpretation, or
• tightening ROOs further.

Each presents trade-offs. The report concludes that resolving auto rules and curbing circumvention will be key to sustaining North American integration amid deepening U.S.-China decoupling.

Link to Report