Mexico weekly: Balancing USMCA renegotiations with soft inflation and growth

Research evidence excerpt

Mexico weekly: Balancing USMCA renegotiations with soft inflation and growth

AmericaBanco J.P.Morgan, S.A., Institución de Banca Múltiple, J.P.Morgan Grupo FinancieroLatin Economic Research J P M O R G A N 17 July 2026Gabriel Lozano

(52-55) 5540-9558

gabriel.lozano@jpmorgan.com

The story is similar in the retail sector. After a 0.8%samr increase in April, we expect a

lackluster 0.1%samr increase in May retail sales, leaving annual growth at 3.1%oya.

USMCA: Round 3 ahead of annual meetings

On July 1, the US opted not to renew the USMCA agreement and instead proposed annual

reviews to determine whether to extend it in the future. Under this framework, the US is

expected to meet separately with Mexico and Canada to address bilateral trade issues.

While two negotiation rounds have already taken place between Mexico and the US, the next

round, scheduled for next week, will be the first since the decision not to renew the agreement.

As a result, the discussions carry greater significance than previous rounds. The negotiations

should provide greater insight into the level of goodwill on both sides to reach an agreement,

the key issues under discussion (see Table 1), and the potential red lines for each country.

While we maintain our baseline view that an extension of the agreement is unlikely before

late next year, we also expect Mexico and the US to continue negotiations in the coming

months. USTR Ambassador Jamieson Greer recently stated that “it’s going well with the

Mexicans. They’re quite pragmatic,” although he also highlighted the trade deficit as a key

US concern. This reflects Mexico’s interest in securing a deal, given that an extension of the

USMCA would help reduce uncertainty, revive investment, preserve export competitiveness,