Mexico Retains Preferential Access Under USMCA Despite New U.S. Forced Labor Tariffs

The Office of the U.S. Trade Representative (USTR) on July 23, 2026, imposed additional tariffs of 10 percent or 12.5 percent on imports into the United States from 60 economies, following investigations initiated under Section 301 of the Trade Act of 1974 regarding the alleged failure to adopt or effectively enforce prohibitions on the importation of goods produced with forced labor. Mexico was assigned a rate of 10 percent.

However, the measure does not constitute an additional blanket tariff on all Mexican exports destined for the U.S. market. According to the USTR's official notice, Mexican products that qualify for duty-free treatment under the United States-Mexico-Canada Agreement (USMCA) are excluded from this tariff. Accordingly, goods that comply with the rules of origin and for which preferential treatment is properly claimed under the USMCA generally retain their zero-tariff rate.

According to the Mexican government, the 10 percent tariff applicable to products that do not receive preferential treatment under the USMCA replaces the additional 10 percent duty that the U.S. had previously imposed on those goods under Section 122. Therefore, the new tariff does not represent a cumulative additional burden relative to the tariff conditions that were in effect immediately before the announcement. The principal novelty lies in the legal basis of the new measure (Section 301 and the forced labor investigation) rather than an increase or accumulation of the effective rate applicable to Mexican exports.

Scope of the Measure

The USTR initiated its forced labor investigations on March 12, 2026, and determined on June 2, 2026, that the practices of the economies under review were unreasonable and constituted a burden or restriction on U.S. commerce. In Mexico's case, U.S. authorities acknowledged that Mexico has a mechanism that legally prohibits the importation of goods, produced wholly or in part with forced labor, but concluded that the country does not enforce it effectively enough.

As a result, the U.S. established:

• a rate of 10 percent for economies that have a prohibition on importing goods produced with forced labor in place, have made commitments to adopt one or apply a partial regime
• a rate of 12.5 percent for the remaining economies under investigation

Mexico was included in the first group, and the new tariff took effect on July 24, 2026. A transitional exception was established for certain goods that were already in transit before the new tariff took effect and were entered for consumption before July 28, 2026.

For Mexico, the new tariff treatment can be summarized as follows:

• USMCA-Compliant Products. Mexican goods that qualify and are imported duty-free under the agreement are excluded from the new 10 percent tariff.
• Non-Preferential Products. Goods that do not meet the rules of origin or for which USMCA preferential treatment is not properly claimed may be subject to the additional 10 percent tariff under Section 301, in addition to the ordinary duty applicable to their tariff classification.
• Products Subject to Sectoral Measures. Goods and parts of goods that are subject to tariffs under Section 232 (sectoral measures adopted by the U.S. on national security grounds and applicable, among others, to certain steel, aluminum, vehicle and auto parts products) were excluded from this Section 301 action. This does not mean they are free from duties. Rather, they will continue to be subject, as applicable, to their respective sectoral regimes, with rates currently ranging from 25 percent to 50 percent, depending on the product, tariff classification and applicable measure.

The USTR also excluded certain materials, inputs and products for which it determined that inclusion could affect U.S. supply, cause economic disruptions or not substantially contribute to remedying the practices under investigation.

Position of the Mexican Government

Mexican President Claudia Sheinbaum stated that the country broadly retains the same tariff conditions that were in effect before the announcement. She explained that the 10 percent tariff established under Section 301 replaces the general framework previously applied by the U.S. for non-USMCA products. By contrast, exports that comply with the agreement retain zero tariffs, without prejudice to specific sectoral regimes.

President Sheinbaum also noted that bilateral negotiations are continuing through a sector-by-sector analysis, particularly in the automotive, steel, electronics, household appliances and aluminum industries. One of the central issues will be the potential strengthening of rules of origin and regional content requirements.

The U.S. seeks to incentivize reindustrialization within its territory and reduce its dependence on supply chains located in other countries. However, Mexico maintains that the economic integration developed in North America over more than three decades has created highly interdependent value chains and that Mexican production generates employment and economic activity in the U.S.

The Mexican government will seek to ensure that the USMCA review produces greater certainty and preserves regional competitiveness against other economies. The discussions are expected to go beyond tariff rates, encompassing rules of origin, recognition of regional content and the conditions applicable to strategic sectors.

Implications for Businesses

The new tariff measure reinforces the importance of properly demonstrating the origin of goods. For exporting companies, whether USMCA preferential treatment is obtained can represent an additional tariff burden of 10 percent.

Companies with operations between Mexico and the U.S. should review:

• eligibility of their products under the USMCA rules of origin
• certifications and documents used to claim preferential treatment
• tariff classification and the special provisions of the U.S. Harmonized Tariff Schedule
• origin and traceability of inputs incorporated into their production processes
• potential application of sectoral measures under Section 232
• changes that may result from negotiations on regional content and rules of origin

Considerations

Though the USTR action constitutes a new tariff measure from a legal standpoint, it does not represent a new general tariff applicable indiscriminately to Mexican exports.

Qualifying goods that are imported into the U.S. duty-free under the USMCA are expressly excluded. For products outside preferential treatment, the Mexican government maintains that the 10 percent rate preserves, not increases, the conditions in effect immediately before the announcement.

In this context, the principal risk for companies does not lie solely in the nominal rate, but in the possibility that stricter rules of origin, new regional content requirements or enhanced traceability controls could impede effective access to USMCA preferences.

For additional information or questions, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.