Trump Prepares New Tariff Wave as USMCA Talks With Mexico Resume, Canada Hit With Fresh Duties

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A Pivotal Week for US Trade Policy

President Donald Trump is preparing to roll out fresh tariffs on dozens of countries as early as this week, according to a Financial Times report cited by Reuters on Tuesday. The move comes just days before Trump's temporary 10% global tariff, imposed under Section 122 of the Trade Act of 1974, is due to expire on Friday, July 24.

The Financial Times reported that the first new duties are likely to mirror the existing 10% rate, while the administration continues building the legal groundwork for potentially higher tariffs through separate trade investigations. Reuters said it could not independently verify the report.

The timing is no coincidence. Section 122 permits the president to impose temporary tariffs for up to 150 days to address balance-of-payments concerns — a legal shortcut the administration reached for after the Supreme Court struck down its earlier "Liberation Day" tariffs in February. That clock now runs out this week, and Congress has shown no sign of acting to extend it.

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Section 301: A More Durable Legal Foundation

Trade lawyers and administration officials widely expect Washington to pivot to Section 301 of the same 1974 law, a tool with no built-in expiration date that Trump also used against China during his first term. The Office of the U.S. Trade Representative has been finalizing an investigation into roughly 60 countries over their handling of forced-labor imports, with proposed rates of 10% for nations lacking bans on such imports and 12.5% for those that have rules but fail to enforce them.

The strategy reflects both legal and fiscal pressure. Treasury tariff revenue fell sharply after the Supreme Court ruling, and the administration has signaled it wants to preserve the roughly 12% effective tariff rate built up since February rather than let it slide back toward pre-2026 levels.

The approach also fits a broader pattern from this administration: using national and economic security justifications — rather than emergency executive powers — to build tariff structures that are harder to challenge in court.

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Canada Sidelined, Hit With New Duties

A day before the Financial Times report, the Trump administration announced new tariffs on close to $20 billion worth of Canadian goods, responding to Ottawa's retaliatory duties on U.S. autos, steel, aluminum, liquor and dairy trade barriers. Canadian Prime Minister Mark Carney said his government had put forward comprehensive proposals to resolve the disputes and argued that past U.S. tariffs violated the North American trade agreement.

Canada has largely been left out of the current round of USMCA renegotiation. U.S. Trade Representative Jamieson Greer has said there has been little movement toward concessions from Ottawa, in contrast to what U.S. officials describe as a more constructive approach from Mexico.

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Mexico Talks Resume Without Canada

While the tariff overhaul takes shape in Washington, U.S. and Mexican negotiators opened a third round of bilateral USMCA talks in Mexico City on Tuesday, running through Thursday. The meeting is part of the mandatory joint review required after the Trump administration declined to renew the pact in its current form on July 1 — a decision that started a 10-year countdown toward the agreement's possible termination unless the three countries reach new terms.

Mexico's new ambassador to Washington, Roberto Lazzeri, said last week he expects a deal by the end of the year, framing further delay as a competitiveness risk for all three countries. Mexico is seeking relief from Trump's 25% tariff on autos and 50% on steel and aluminum, duties that also apply to Canada.

Greer has praised Mexico for not retaliating against U.S. tariffs and for steps to align its export controls with Washington's, protect intellectual property, and curb the export of avocados grown on illegally deforested land.

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Autos and China's Growing Footprint

Much of the technical negotiation is expected to center on rules of origin for the auto industry. In May, USTR proposed that 50% of the value of any North American-built vehicle originate in the United States — a sharp departure from current thresholds that would force major supply-chain adjustments for automakers across the region.

China's expanding presence in Mexico's car market has become a growing irritant in the talks. Industry data show Chinese car sales in Mexico rose roughly 30% in the first half of 2026 despite 50% tariffs imposed in January, with Chinese brands lifting their market share to about 17%, up from 14% a year earlier. U.S. officials view this as part of a broader effort by Chinese firms to use Mexico and Canada as a backdoor into the American market — a concern that sits at the heart of what USTR calls "economic security."

Washington's trade deficit with Mexico, which has grown as supply chains shifted away from China, remains a central concern for the administration. That gap widened by $28 billion, or 17%, to $197 billion in 2025, according to U.S. Census Bureau figures.

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Outlook

With Section 122 tariffs set to lapse this week and Section 301 measures waiting in the wings, businesses on both sides of the border face a narrow window of uncertainty over which tariff regime will apply to their goods. Whether Mexico can secure meaningful relief from steel, aluminum and auto tariffs — while Canada remains largely frozen out of the process — is likely to shape not only the future of USMCA, but the broader architecture of Trump's second-term trade policy.

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Sources

1. Reuters – Trump prepares fresh tariffs on dozens of countries, FT reports: https://www.reuters.com/world/china/trump-prepares-fresh-tariffs-dozens-countries-ft-reports-2026-07-21/
2. Reuters – US, Mexico resume USMCA trade talks as Trump hits Canada with new tariffs: https://www.reuters.com/world/china/us-mexico-resume-usmca-trade-talks-trump-hits-canada-with-new-tariffs-2026-07-21/
3. Office of the United States Trade Representative – United States and Mexico to Convene in Mexico City for Third Bilateral Negotiating Round: https://ustr.gov/about/policy-offices/press-office/press-releases/2026/july/united-states-and-mexico-convene-mexico-city-third-bilateral-negotiating-round-related-joint-review
4. Council on Foreign Relations – Trump's New Tariffs: What to Know: https://www.cfr.org/articles/trumps-new-tariffs-what-to-know
5. Atlantic Council – Trump Tariff Tracker: https://www.atlanticcouncil.org/programs/geoeconomics-center/trump-tariff-tracker/

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