The clock is ticking on the U.S.-Mexico-Canada Agreement. On July 1, 2026, the three parties are scheduled to sit down for the formal “joint review” required by the deal itself. Under the terms USMCA’s drafters wrote into the agreement, the entire arrangement automatically expires on July 1, 2036 unless every government affirmatively recommits to it. If even one country declines, the parties move into annual joint reviews until consensus is restored or the agreement sunsets for good.
Bilateral talks between the United States and Mexico are already underway. On April 20, the Office of the U.S. Trade Representative announced that the first official negotiating round will be held in Mexico City the week of May 25, with teams in the meantime tasked with advancing technical discussions on economic security, complementary trade actions, stronger rules of origin for “key industrial goods,” critical minerals collaboration, and resolving “outstanding bilateral trade irritants.”
That is a lot of bureaucratic euphemism for what is actually at stake: whether the United States doubles down on a free-trade framework that has failed American producers, or whether we use this opening to construct something entirely different — a managed-trade model that protects our home market and rebuilds our productive base.
The single most important thing American producers and policymakers need to grasp right now is this: every trade agreement turns on what is called the “Schedule of Concessions,” and the U.S. Schedule of Concessions in USMCA is a disaster. Future negotiators must reject any deal that repeats that structure.
Why the Schedule of Concessions Is the Whole Ballgame
A trade agreement is, at its core, a bundle of tariff promises. Each party deposits a Schedule of Concessions — often running hundreds of pages — that lists thousands of individual product categories alongside the maximum tariff rate that country commits to charging on the other parties’ goods. Everything else in a trade deal — dispute settlement, labor chapters, intellectual property provisions — is window dressing compared to those schedules. They are the binding economic core.
When USMCA went into force, the United States committed a maximum tariff rate of zero on every single product and product category arriving from Mexico. Not most products. Not strategic exceptions. Zero. Across the board. Anything that could physically show up at our southern border stamped “Product of Mexico” came in duty-free.
The U.S.–Canada schedule was nearly identical, with one critical difference: managed trade for agricultural products — dairy, poultry, eggs, and sugar among them — were carved out into a separate appendix and subjected to tariff-rate quotas (TRQs). Instead of a zero for zero schedule based on academic “rules”, it traded outcome for outcome. The TRQ caps the volume of foreign product that can enter at the low (or zero) duty rate; anything beyond the quota faces a steep over-quota tariff designed to be prohibitive. That is managed trade. It is not free trade and it is not absolutist protectionism. It is a deliberate, negotiated ceiling on import penetration of a domestic market.
That carve-out is the template. It should have been applied to every American industry from the beginning, and it must be applied going forward.
The Rule-of-Origin Fig Leaf
Defenders of the zero-for-zero U.S. schedule will point to USMCA’s heightened “rules of origin” as the supposed safeguard. The argument runs: yes, the schedule says zero, but to actually qualify for the zero rate, products have to be genuinely North American — not Asian goods trans-shipped through Mexican assembly plants.
This is the central illusion at the heart of modern free-trade architecture, and it must be confronted honestly. For the vast majority of manufactured products imported from Mexico, the rule of origin is a joke. A bicycle qualifies as a “Product of Mexico” — and therefore enters the U.S. duty-free — even if the steel or aluminum in its frame comes from China, along with the seat, tires, handlebars, derailleur, chain, and every other component. As long as the bike frame was shaped and accoutrement assembled in Mexico, it is Mexican for tariff purposes. Multiply that across thousands of product categories and the scale of the transshipment comes into focus.
USMCA’s negotiators tried to close that loophole in two sectors: apparel and automotive. Both rules failed, for instructive but different reasons.
The apparel rule — the so-called “yarn-forward” rule — requires that the yarn, the fabric, and the cut-and-sew operations all take place within North America for a garment to qualify for the zero rate. Yarn-forward is also extended to CAFTA-DR countries, and is intended to keep the textile supply chain in this hemisphere. In practice, it is enforced almost entirely on the honor system. There is no shortage of fly-by-night apparel makers in Mexico or Central America happy to certify that they used qualifying North American textiles when in fact they sourced their fabric from Asia.
The numbers from CBP’s own enforcement program tell the story. In February 2024, CBP and Homeland Security Investigations conducted the first post-USMCA Textile Production Verification Team (TPVT) visit to Mexico, inspecting 31 Mexican factories in a two-week sweep. By the end of fiscal year 2024, the broader TPVT program — covering Mexico, Honduras, and other partner-country facilities claiming preferential treatment on roughly $800 million in textile imports — was finding a 38 percent non-compliance rate, nearly double the 21 percent rate the program had recorded the year before. CBP separately reported that 42 percent of textile shipments pulled aside for laboratory analysis were misdeclared or misdescribed on entry. These are not edge-case statistics. They describe an enforcement regime in which fraud is closer to the rule than the exception — and they describe only what a thinly resourced TPVT operation managed to catch. At an industry convention in April, 2026, the chairman of the National Council of Textile Organizations shared the predictable results:
“In just two and a half years, more than 40 US textile plants have closed. Let that sink in. Forty facilities — many in rural communities where a textile mill is the economic backbone — shut their doors. Families were impacted. Communities were shaken.”
The chairman, Chuck Hall, who is also the CEO of textile manufacturer Barnet, explicitly attributed that loss to “predatory trade practices intensifying, the surge in illegal transshipments, customs fraud and logistics breakdowns which rippled across supply chains.”
The automotive rule failed differently. The Regional Value Content thresholds, Labor Value Content requirements, and steel and aluminum sourcing rules ended up so technical and prescriptive that almost all automakers opted to invoke USMCA’s “Alternative Staging Regime” — a loophole that effectively gutted the new requirements for the largest manufacturers. The individual ASR petitions and the concessions granted to each company are confidential.
The measurable benefit to American auto assembly has been close to nil. To make matters worse, the United States lost a USMCA dispute brought by Mexico over the calculation methodology, a defeat that institutionalized more Chinese content in vehicles entering the U.S. duty-free, not less.
Put the legal loss aside for a moment. The deeper lesson is political. Both Canada and Mexico remain governed by administrations entirely comfortable handing multinational OEM executives whatever concessions they request, including expanded access to Chinese inputs. The notion that we can negotiate sophisticated rules of origin with Ottawa and Mexico City and then trust them to police those rules against the wishes of the very multinationals whose lobbying drives their trade policy is not realism. It is wishful thinking dressed up as policy.
The Right Architecture: TRQs, Not Tariff Eliminations
Here is the bottom-line American negotiators should carry into Mexico City: stop trading away tariffs. The American Protective Tariff League understood a century ago what too many in Washington have forgotten: a country’s home market is its most valuable economic asset, and the tariff is the instrument by which that market is reserved for its own producers.
Future trade agreements — whether the USMCA refresh, deals with potential new partners, or rebuilds of older arrangements — must abandon the zero-for-zero default. The architecture should be straightforward: meaningful applied tariffs as the baseline, with cautious managed-trade carve-outs — tariff-rate quotas and similar quantitative instruments — used judicially for any product category only when necessary due to import reliance.
The current USTR, Ambassador Greer, deserves credit for making progress on this front. First, his Schedules of Concessions attached to the nine “Agreements on Reciprocal Trade” do not blanket out everything at zero, but rather are selective about which products receive concessions. This is a big improvement over prior USTR’s “Free Trade Agreements”. Secondly, we saw in the May 2025 US-UK Trade Deal a TRQ approach for automotive that actually sets outcome expectations: a 10% tariff on the first 100,000 cars imported from the UK, and 25% thereafter.
If We Must Have Rules of Origin, Move Them Into the 21st Century
There remain some contexts in which a rule of origin is genuinely useful — not as a condition for unlimited duty-free market access, but for narrower, defensible purposes such as excluding sanctioned inputs, enforcing forced-labor prohibitions, or qualifying products for specific national-security exemptions. Where rules of origin survive, they must make use of 21st century technology.
The current rules of origin all rest on 20th-century paper-based fiction. Under the textile yarn-forward rule, any U.S. importer can simply claim qualification on the entry documents. No supporting evidence is filed with the claim. The actual paper trail — a stack of Manufacturer’s Affidavits — sits in a filing cabinet at the Mexican producer’s facility, where it can be inspected only if and when CBP funds an enforcement team to fly down to Mexico to spot-check the supplier. Those trips are rare, expensive, and underwritten by U.S. taxpayers. And, as the TPVT figures above make clear, when they do happen the results are horrendous.
The Biden Administration introduced two new rules of origin, but the structure of the verification is the same paper-based after-the-fact spot-check. The “melted-and-poured” requirement for steel — formalized as a Section 232 reporting standard in 2024 — asks importers to declare the country where their raw steel was first cast. The “smelted-and-cast” requirement for primary aluminum — first imposed in 2023 to enforce the 200 percent tariff on Russian aluminum — asks importers to declare the country where the metal was reduced from alumina. Both are reported by the importer on the entry summary. CBP does not require Mill Test Certificates or aluminum Certificates of Analysis to be filed at entry. The supporting paperwork sits with the foreign producer, produced only when CBP issues a Form CF-28 request or sends an auditor abroad. Two new rules; the same old enforcement model.
There is a better way, and it has been sitting on the shelf for nearly a decade. As far back as 2018, the Department of Homeland Security was publicly praising the application of distributed-ledger technology — blockchain — to supply-chain verification. U.S. Customs and Border Protection has since completed successful pilot programs using distributed-ledger origin verification in the steel sector and on oil pipeline imports. The technology is no longer theoretical. It exists. It works. It provides ongoing, real-time, tamper-resistant verification of an importer’s certification claims — something paper affidavits in a Monterrey filing cabinet can never deliver.
Take the yarn-forward rule as the illustration. If every North American mill registered each Manufacturer’s Affidavit on the ledger at the moment of sale — signed cryptographically, with fiber type, quantity, lot number, and date — and every Mexican cut-and-sew operation drew down against those signed entries, CBP could verify a yarn-forward claim instantaneously at the moment of entry, without ever leaving Washington. Either the chain of custody is on the ledger or the entry does not qualify. No fly-by-night Monterrey shop could forge an affidavit for Asian fabric it never bought, because the underlying certificate would not exist on-chain to point to.
If the United States is going to enforce any rule of origin in the next generation of trade agreements, it should be done on-chain — not on photocopies sitting in a foreign producer’s file room.
The Stakes of May 25
When American negotiators land in Mexico City later this month, they will be told — by their Mexican counterparts, by U.S. multinationals, by the usual free-trade think tanks — that the goal of the USMCA review is to “preserve” and “modernize” the existing agreement. Translation: keep the zero-for-zero U.S. schedule intact and tweak the rules of origin around the edges.
That would be a catastrophic missed opportunity. The 2026 review is the first real chance in a generation to rewrite the architecture of North American trade away from global consolidation. Canada and Mexico should be encouraged to pursue their own indigenous innovation and productive output, as we restore our own productive capacity. Where integrated supply chains may make sense, let’s have those discussions on a product-by-product, sector-by-sector basis, but reject sweeping “let the chips fall where they may” zero for zero mantras. The framework is staring us in the face: managed trade, tariff-rate quotas modeled on the existing U.S.–Canada agricultural carve-outs, on-chain origin verification where origin matters at all, and a permanent end to the zero-for-zero default that has hollowed out our industrial base.
Bury zero-for-zero. That should be the message every American producer sends to USTR before our negotiators board their flight to Mexico City.
Charles Benoit is Trade Counsel for the Coalition for a Prosperous America.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Stop Trading Away Industries. Stop Trusting Paper Origins. The USMCA Review Stakes.
The clock is ticking on the U.S.-Mexico-Canada Agreement. On July 1, 2026, the three parties are scheduled to sit down for the formal “joint review” required by the deal itself. Under the terms USMCA’s drafters wrote into the agreement, the entire arrangement automatically expires on July 1, 2036 unless every government affirmatively recommits to it. If even one country declines, the parties move into annual joint reviews until consensus is restored or the agreement sunsets for good.
Bilateral talks between the United States and Mexico are already underway. On April 20, the Office of the U.S. Trade Representative announced that the first official negotiating round will be held in Mexico City the week of May 25, with teams in the meantime tasked with advancing technical discussions on economic security, complementary trade actions, stronger rules of origin for “key industrial goods,” critical minerals collaboration, and resolving “outstanding bilateral trade irritants.”
That is a lot of bureaucratic euphemism for what is actually at stake: whether the United States doubles down on a free-trade framework that has failed American producers, or whether we use this opening to construct something entirely different — a managed-trade model that protects our home market and rebuilds our productive base.
The single most important thing American producers and policymakers need to grasp right now is this: every trade agreement turns on what is called the “Schedule of Concessions,” and the U.S. Schedule of Concessions in USMCA is a disaster. Future negotiators must reject any deal that repeats that structure.
Why the Schedule of Concessions Is the Whole Ballgame
A trade agreement is, at its core, a bundle of tariff promises. Each party deposits a Schedule of Concessions — often running hundreds of pages — that lists thousands of individual product categories alongside the maximum tariff rate that country commits to charging on the other parties’ goods. Everything else in a trade deal — dispute settlement, labor chapters, intellectual property provisions — is window dressing compared to those schedules. They are the binding economic core.
When USMCA went into force, the United States committed a maximum tariff rate of zero on every single product and product category arriving from Mexico. Not most products. Not strategic exceptions. Zero. Across the board. Anything that could physically show up at our southern border stamped “Product of Mexico” came in duty-free.
The U.S.–Canada schedule was nearly identical, with one critical difference: managed trade for agricultural products — dairy, poultry, eggs, and sugar among them — were carved out into a separate appendix and subjected to tariff-rate quotas (TRQs). Instead of a zero for zero schedule based on academic “rules”, it traded outcome for outcome. The TRQ caps the volume of foreign product that can enter at the low (or zero) duty rate; anything beyond the quota faces a steep over-quota tariff designed to be prohibitive. That is managed trade. It is not free trade and it is not absolutist protectionism. It is a deliberate, negotiated ceiling on import penetration of a domestic market.
That carve-out is the template. It should have been applied to every American industry from the beginning, and it must be applied going forward.
The Rule-of-Origin Fig Leaf
Defenders of the zero-for-zero U.S. schedule will point to USMCA’s heightened “rules of origin” as the supposed safeguard. The argument runs: yes, the schedule says zero, but to actually qualify for the zero rate, products have to be genuinely North American — not Asian goods trans-shipped through Mexican assembly plants.
This is the central illusion at the heart of modern free-trade architecture, and it must be confronted honestly. For the vast majority of manufactured products imported from Mexico, the rule of origin is a joke. A bicycle qualifies as a “Product of Mexico” — and therefore enters the U.S. duty-free — even if the steel or aluminum in its frame comes from China, along with the seat, tires, handlebars, derailleur, chain, and every other component. As long as the bike frame was shaped and accoutrement assembled in Mexico, it is Mexican for tariff purposes. Multiply that across thousands of product categories and the scale of the transshipment comes into focus.
USMCA’s negotiators tried to close that loophole in two sectors: apparel and automotive. Both rules failed, for instructive but different reasons.
The apparel rule — the so-called “yarn-forward” rule — requires that the yarn, the fabric, and the cut-and-sew operations all take place within North America for a garment to qualify for the zero rate. Yarn-forward is also extended to CAFTA-DR countries, and is intended to keep the textile supply chain in this hemisphere. In practice, it is enforced almost entirely on the honor system. There is no shortage of fly-by-night apparel makers in Mexico or Central America happy to certify that they used qualifying North American textiles when in fact they sourced their fabric from Asia.
The numbers from CBP’s own enforcement program tell the story. In February 2024, CBP and Homeland Security Investigations conducted the first post-USMCA Textile Production Verification Team (TPVT) visit to Mexico, inspecting 31 Mexican factories in a two-week sweep. By the end of fiscal year 2024, the broader TPVT program — covering Mexico, Honduras, and other partner-country facilities claiming preferential treatment on roughly $800 million in textile imports — was finding a 38 percent non-compliance rate, nearly double the 21 percent rate the program had recorded the year before. CBP separately reported that 42 percent of textile shipments pulled aside for laboratory analysis were misdeclared or misdescribed on entry. These are not edge-case statistics. They describe an enforcement regime in which fraud is closer to the rule than the exception — and they describe only what a thinly resourced TPVT operation managed to catch. At an industry convention in April, 2026, the chairman of the National Council of Textile Organizations shared the predictable results:
“In just two and a half years, more than 40 US textile plants have closed. Let that sink in. Forty facilities — many in rural communities where a textile mill is the economic backbone — shut their doors. Families were impacted. Communities were shaken.”
The chairman, Chuck Hall, who is also the CEO of textile manufacturer Barnet, explicitly attributed that loss to “predatory trade practices intensifying, the surge in illegal transshipments, customs fraud and logistics breakdowns which rippled across supply chains.”
The automotive rule failed differently. The Regional Value Content thresholds, Labor Value Content requirements, and steel and aluminum sourcing rules ended up so technical and prescriptive that almost all automakers opted to invoke USMCA’s “Alternative Staging Regime” — a loophole that effectively gutted the new requirements for the largest manufacturers. The individual ASR petitions and the concessions granted to each company are confidential.
The measurable benefit to American auto assembly has been close to nil. To make matters worse, the United States lost a USMCA dispute brought by Mexico over the calculation methodology, a defeat that institutionalized more Chinese content in vehicles entering the U.S. duty-free, not less.
Put the legal loss aside for a moment. The deeper lesson is political. Both Canada and Mexico remain governed by administrations entirely comfortable handing multinational OEM executives whatever concessions they request, including expanded access to Chinese inputs. The notion that we can negotiate sophisticated rules of origin with Ottawa and Mexico City and then trust them to police those rules against the wishes of the very multinationals whose lobbying drives their trade policy is not realism. It is wishful thinking dressed up as policy.
The Right Architecture: TRQs, Not Tariff Eliminations
Here is the bottom-line American negotiators should carry into Mexico City: stop trading away tariffs. The American Protective Tariff League understood a century ago what too many in Washington have forgotten: a country’s home market is its most valuable economic asset, and the tariff is the instrument by which that market is reserved for its own producers.
Future trade agreements — whether the USMCA refresh, deals with potential new partners, or rebuilds of older arrangements — must abandon the zero-for-zero default. The architecture should be straightforward: meaningful applied tariffs as the baseline, with cautious managed-trade carve-outs — tariff-rate quotas and similar quantitative instruments — used judicially for any product category only when necessary due to import reliance.
The current USTR, Ambassador Greer, deserves credit for making progress on this front. First, his Schedules of Concessions attached to the nine “Agreements on Reciprocal Trade” do not blanket out everything at zero, but rather are selective about which products receive concessions. This is a big improvement over prior USTR’s “Free Trade Agreements”. Secondly, we saw in the May 2025 US-UK Trade Deal a TRQ approach for automotive that actually sets outcome expectations: a 10% tariff on the first 100,000 cars imported from the UK, and 25% thereafter.
If We Must Have Rules of Origin, Move Them Into the 21st Century
There remain some contexts in which a rule of origin is genuinely useful — not as a condition for unlimited duty-free market access, but for narrower, defensible purposes such as excluding sanctioned inputs, enforcing forced-labor prohibitions, or qualifying products for specific national-security exemptions. Where rules of origin survive, they must make use of 21st century technology.
The current rules of origin all rest on 20th-century paper-based fiction. Under the textile yarn-forward rule, any U.S. importer can simply claim qualification on the entry documents. No supporting evidence is filed with the claim. The actual paper trail — a stack of Manufacturer’s Affidavits — sits in a filing cabinet at the Mexican producer’s facility, where it can be inspected only if and when CBP funds an enforcement team to fly down to Mexico to spot-check the supplier. Those trips are rare, expensive, and underwritten by U.S. taxpayers. And, as the TPVT figures above make clear, when they do happen the results are horrendous.
The Biden Administration introduced two new rules of origin, but the structure of the verification is the same paper-based after-the-fact spot-check. The “melted-and-poured” requirement for steel — formalized as a Section 232 reporting standard in 2024 — asks importers to declare the country where their raw steel was first cast. The “smelted-and-cast” requirement for primary aluminum — first imposed in 2023 to enforce the 200 percent tariff on Russian aluminum — asks importers to declare the country where the metal was reduced from alumina. Both are reported by the importer on the entry summary. CBP does not require Mill Test Certificates or aluminum Certificates of Analysis to be filed at entry. The supporting paperwork sits with the foreign producer, produced only when CBP issues a Form CF-28 request or sends an auditor abroad. Two new rules; the same old enforcement model.
There is a better way, and it has been sitting on the shelf for nearly a decade. As far back as 2018, the Department of Homeland Security was publicly praising the application of distributed-ledger technology — blockchain — to supply-chain verification. U.S. Customs and Border Protection has since completed successful pilot programs using distributed-ledger origin verification in the steel sector and on oil pipeline imports. The technology is no longer theoretical. It exists. It works. It provides ongoing, real-time, tamper-resistant verification of an importer’s certification claims — something paper affidavits in a Monterrey filing cabinet can never deliver.
Take the yarn-forward rule as the illustration. If every North American mill registered each Manufacturer’s Affidavit on the ledger at the moment of sale — signed cryptographically, with fiber type, quantity, lot number, and date — and every Mexican cut-and-sew operation drew down against those signed entries, CBP could verify a yarn-forward claim instantaneously at the moment of entry, without ever leaving Washington. Either the chain of custody is on the ledger or the entry does not qualify. No fly-by-night Monterrey shop could forge an affidavit for Asian fabric it never bought, because the underlying certificate would not exist on-chain to point to.
If the United States is going to enforce any rule of origin in the next generation of trade agreements, it should be done on-chain — not on photocopies sitting in a foreign producer’s file room.
The Stakes of May 25
When American negotiators land in Mexico City later this month, they will be told — by their Mexican counterparts, by U.S. multinationals, by the usual free-trade think tanks — that the goal of the USMCA review is to “preserve” and “modernize” the existing agreement. Translation: keep the zero-for-zero U.S. schedule intact and tweak the rules of origin around the edges.
That would be a catastrophic missed opportunity. The 2026 review is the first real chance in a generation to rewrite the architecture of North American trade away from global consolidation. Canada and Mexico should be encouraged to pursue their own indigenous innovation and productive output, as we restore our own productive capacity. Where integrated supply chains may make sense, let’s have those discussions on a product-by-product, sector-by-sector basis, but reject sweeping “let the chips fall where they may” zero for zero mantras. The framework is staring us in the face: managed trade, tariff-rate quotas modeled on the existing U.S.–Canada agricultural carve-outs, on-chain origin verification where origin matters at all, and a permanent end to the zero-for-zero default that has hollowed out our industrial base.
Bury zero-for-zero. That should be the message every American producer sends to USTR before our negotiators board their flight to Mexico City.
Charles Benoit is Trade Counsel for the Coalition for a Prosperous America.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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