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Trade & Customs Oct 12, 2026 · 8 min read

Trump splits USMCA into two tracks as tariffs head into the midterms

Trump says the US does not need Canada. Plan for a Mexico-first deal and Canada risk into 2027. At a 10 October rally, Trump said the US will make a new trade deal with Mexico and does not need Canada, as reported by The Rio Times. On 12 October, Mexico’s President Sheinbaum said: “There is progress, there is no final agreement yet, but we keep talking.” Our view: this is a two-track negotiation, and Canada lanes carry most of the risk. US–Mexico freight hit $94.8bn in July, up 27.5% (BTS). Canada has a 50% tariff on its cars and steel due in January. We expect no signed US–Mexico text before the 3 November midterms.

North America now has two trade talks, not one. Forwarders should price Canada risk into January
On Saturday 10 October, at a campaign rally in Clarksville, Tennessee, President Trump said the United States would make a new trade deal with Mexico and did not need Canada. The Rio Times relayed the remarks from the Mexican outlets Latinus and SDP Noticias. Trump gave no date for the deal, no text, and no word on whether it would replace the USMCA, the US–Mexico–Canada Agreement that has governed North American trade since 1 July 2020.
Two days later, on Monday 12 October, Mexico’s President Claudia Sheinbaum answered at her morning press conference. “There is progress, there is no final agreement yet, but we keep talking,” she said, as quoted by López-Dóriga Digital and relayed by The Rio Times. The Rio Times notes that it could not check her wording against the official presidency transcript.
Our view is simple. The USMCA is no longer one three-way negotiation. It has become two bilateral ones. Mexico is being offered a deal. Canada is being offered tariffs. For forwarders, that means the risk in North American freight now sits mostly on the northern border, and it has a date on it: January 2027.

What was said, and what wasn’t

Start with what is on the record.
The Rio Times reports that Sheinbaum confirmed Washington is now negotiating with Mexico and Canada separately. The three countries are split over how long to extend the pact. The US has proposed a 10-year extension with a review every year. Mexico and Canada have asked for 16 years. Sheinbaum said the longer term could still come in a later round: “That possibility is not closed.”
Mexico’s ask is about tariffs. Sheinbaum said Mexico wants the US to cut its tariffs on cars, steel and aluminium, and to impose no new ones while the review goes on. “What we want is the reduction of those tariffs,” she told reporters, according to López-Dóriga Digital.
On Canada, the Rio Times account of the rally says most of Trump’s remarks targeted Ottawa. He repeated that the US loses money trading with Canada. The paper chose not to repeat his loss figures, because outlets transcribed them differently. That is worth noting. The rally line is loud, but it is not a policy document.
What is a policy document is the tariff calendar. In August, Trump announced 50% tariffs on Canadian cars and steel from January 2027, El Financiero reported at the time, according to The Rio Times. AP’s Bernard Condon wrote on 11 October that, after US–Canada trade talks broke down this summer, the two countries “are mired in a tit-for-tat dispute, with both countries escalating tariffs on each other.”
No draft text, timetable or list of agreed points has been published for a US–Mexico deal. It is also unclear whether a separate deal would replace the three-way pact or sit alongside it.

How the USMCA review works now

Some background helps here, because the rules changed this summer.
The USMCA has a built-in check-up. Every six years the three countries meet for a joint review. If all three confirm they want to continue, the pact’s 16-year term is reset. If any one of them declines, the pact does not end. Instead, the countries move to a review every year.
At the first joint review on 1 July 2026, the US declined to extend the pact, The Rio Times reports. As a result, Foley & Lardner’s weekly trade note says, annual joint reviews will now occur “until all parties agree to extend the agreement or termination occurs in 2036.” In plain terms: the pact is still in force today, but it has a hard end date ten years out, and a fresh fight every year until then.
The next step is already open. USTR (the Office of the US Trade Representative) has launched a public consultation ahead of the 2027 joint review. Comments are due on 12 January 2027. The topics include compliance, competitiveness, investment and economic security.
That date matters for shippers. Any company that wants its rules-of-origin or tariff concerns on the record has until 12 January to file. Rules of origin are the tests that decide whether a product counts as North American and so qualifies for the pact’s lower duties.

What happened last time

This has happened before, and it is the best guide we have.
In 2018, during the renegotiation of NAFTA (the pact the USMCA replaced), Washington also went to Mexico first. A US–Mexico deal was reached on 27 August 2018 while Canada still had not agreed. Negotiators finished the three-way draft just before midnight on 30 September 2018. In other words, the bilateral track lasted about five weeks before it folded back into a three-country deal.
Our reading is that the 2018 playbook is being run again, but with two differences that make it slower this time.
First, there is no forcing deadline. In 2018 the pressure was to finish a text. Today, the annual-review rule means the pact simply carries on while the US keeps the threat alive. Nobody has to sign anything soon.
Second, the tariffs are already live and still rising. AP reports that since the Supreme Court struck down Trump’s “reciprocal” tariffs in February, his main tool has been Section 301 of the Trade Act of 1974, a law that lets the US act against what it calls unfair trade practices. AP says “The new duties range from 10% to 12.5% on imports from 60 economies,” and that list includes Canada and Mexico. On metals, Foley & Lardner reports new Commerce guidance under which “USMCA-qualifying goods are subject to the 25% duty only on their non-U.S. content.” That makes it far more valuable to prove what share of a Canadian or Mexican steel, aluminium or copper product came from the US.

The freight already knows

The trade data shows the split before any deal does.
According to the Bureau of Transportation Statistics (BTS), freight between the US and its two neighbours was worth $157.6bn in July 2026, up 18.8% on July 2025. But the growth was lopsided. US–Mexico freight was $94.8bn, up 27.5%. US–Canada freight was $62.8bn, up 7.8%.
Trucks carry most of it. BTS puts truck freight at $108.2bn in July, up 23.9%. Of that, $74.6bn moved across the Mexican border and $33.6bn across the Canadian one. Rail carried $15.6bn.
Census figures cited by The Rio Times show why Mexico sits at the centre of the politics. The US goods deficit with Mexico was $197.0bn in 2025, against $48.3bn with Canada. Yet it is Canada that is being told it is not needed. Our view: Mexico is being treated as a manufacturing partner worth keeping, and Canada as a bargaining chip.
Markets are not betting on a quick fix either. The Rio Times reports that Polymarket gave a formal USMCA extension in 2026 a 9.5% chance as of 11 October. A separate contract on a new US–Mexico deal before 2027 stood at 12.5%, though trading on it was thin.

The midterm test

Politics will not soften this before the vote. AP reports that a recent poll found more than 64% of US adults say Trump has “gone too far with his latest tariffs,” up from 58% in January. The midterms are on 3 November.
The White House is not backing down. “Factory construction jobs of today mean more manufacturing jobs down the road once those factories come online,” said White House spokeswoman Taylor Rogers.
Our view: a “we don’t need Canada” line plays well at a rally, and a Mexico deal announcement would be a useful headline before 3 November. But an announcement is not a signed text, and neither is a tariff cut. Forwarders should plan on today’s rates.

What forwarders should do now

Here is what we think this means on the ground.
Canada lanes carry the near-term risk. If the 50% tariff on Canadian cars and steel lands in January as announced, expect shippers to pull auto parts and steel moves forward into November and December. That means tighter northbound and southbound truck capacity on the main Ontario–Michigan and Quebec–New York crossings late in Q4, then a drop-off in January.
Mexico lanes keep growing. The BTS numbers show the shift is already under way. Cross-border truck and rail customers on Mexican lanes should still keep tariff clauses in contracts, because no US–Mexico text exists yet.
Documentation is now a cost line. With metal duties charged only on non-US content, the shipper who can prove origin pays less. Forwarders and customs brokers who can help clients collect supplier declarations and value breakdowns will win that work.
The 12 January comment deadline is a client service. Shippers with exposure should file. Forwarders can flag it now, before the holiday rush.

Our call

We expect no signed US–Mexico trade text before the 3 November midterms. We also expect no three-way USMCA extension before the USTR comment window closes on 12 January 2027. Our base case, based on 2018, is that any US–Mexico deal ends up folding Canada back in. But this time it takes months, not weeks, and Canadian freight carries the cost in the meantime. We expect US–Mexico freight growth to keep outpacing US–Canada growth in every monthly BTS release through the end of 2026.

Sources