2026 Preview: Mexico Energy Overhaul to Test USMCA as July Review of Pact Approaches

Mexico will be under pressure in the new year to prove that sweeping changes to its energy sector conform with the U.S.-Mexico-Canada Agreement on trade that was developed at a time when market conditions were different.

Investors, energy industry officials and U.S. and Canadian government representatives will over the next six months watch how Mexico implements changes to its energy, customs and judicial regulations that could define the tone of a mandatory joint review of the trade pact in July.

Because Mexico’s energy reforms were enacted recently, international attention will likely focus on how U.S. investors can work with state-owned Pemex in exploration projects and how efficiently the new National Energy Commission operates as a regulator, according to José María Valenzuela of Mexico
City-based university El Colegio de México. “We are in a stage where many of the uncertainties will fade away,” he said. “If investment commitments begin to materialize in Mexico, the risk of the
energy issue becoming a complication in the negotiation starts to diminish.”

But the International Chamber of Commerce Mexico said in a late-November report that the customs law reform could be perceived as “overregulation in certain areas,” adding that Mexico’s judicial reform could also raise doubts about the stability of Mexico’s framework for resolving disputes. And while the energy sector is unlikely to dominate the USMCA review, analysts say the topic will be a focus given the scale of Mexico’s recent overhaul.

Mexico’s primary energy reform law was enacted in March, with accompanying regulations introduced in early October. The measure partially reversed 2013 energy reforms by restoring Pemex and CFE to public-entity status and giving them preference over private competitors.

The amendments triggered complaints from groups such as the Business Roundtable, which argued that the rules discriminate against U.S. companies and may violate USMCA provisions by granting preferential treatment to state-owned firms. Mexico’s Energy Ministry rejected this interpretation, but the issue is expected to surface in 2026.

“I think there will be complaints about that from [President] Trump as well, but how extensive those will be is really hard to tell,” according to David Gantz of Rice University’s Baker Institute.

Regina González, an associate at Mexico-City based law firm Von Wobeser y Sierra, however, said the USMCA recognizes Mexico’s direct ownership of hydrocarbon fuel and its authority over the sector. “Mexico is acting within its legal framework,” she added.

She also said private investment remains open in different parts of the energy chain, even if Pemex receives priority in some areas such as the determination and allocation of assignments. Given that, González said the reforms comply with the USMCA.

The new energy regulatory changes pertaining to permit compliance and procedural clarity will feature prominently in the discussion, according to González. “I believe those are positive changes for the Mexican and foreign investors seeking clarity, certainty and security.”

The USMCA doesn’t expire until 2036, but the three countries must conduct a formal joint review to decide whether to extend the agreement, negotiate changes or allow it to remain in effect with additional reviews scheduled.

These six-year reviews are designed to allow adjustments to the agreement without triggering a renegotiation unless a country formally requests one, Kenneth Smith Ramos, partner at Mexico City-based law firm Agon and Mexico’s former Nafta and USMCA negotiator, told OPIS.

“There is a possibility that the U.S., with its aggressive stance on foreign trade and its use of tariffs as a pressure tool, will try to push for substantive changes to the treaty,” he said, referring to the Trump administration’s embrace of import tariffs.

The USMCA was negotiated under 2018 regulatory conditions, Smith Ramos said, meaning countries cannot rely on later constitutional amendments to justify measures that contradict the treaty.

“You don’t have a blank check that allows you, through a constitutional amendment, to undo the commitments you agreed to in the treaty,” he said.

Revision or renegotiation?

During a Senate hearing in mid-October, Economy Minister Marcelo Ebrard said early fears over the treaty’s future have eased. “When this discussion, this dialogue, began, the future of the treaty was indeed in doubt. I’m talking about January. There were legitimate concerns,” he said. “Today I don’t believe we face that risk, because the U.S. wouldn’t have already initiated consultations if it intended to move in another direction.” He said Mexico aims to resolve all sticking points before July and has raised
concerns about unilateral U.S. actions, including measures against Mexican exports. “The treaty will remain, the treaty will survive. And new opportunities will emerge for our country,” he said.

Smith Ramos outlined four potential outcomes: a smooth review with no major changes, though he considers this unlikely given current tensions, a U.S.-driven push for renegotiation, annual review cycles if the countries fail to reach consensus by late 2026; or the most disruptive, but least likely scenario, a U.S. withdrawal, something Trump avoided in his first term, choosing instead to negotiate and sign the USMCA. “Leaving the treaty would provoke a serious upheaval among U.S. productive sectors that depend heavily on the Mexican and Canadian markets,” he said.

With the threat of tariffs on cars, steel, lumber and other goods, Gantz said he also expects the topic of energy won’t be a priority of the review.

Luis Miguel Jiménez, partner at Von Wobeser y Sierra, expects the review to turn into more of a renegotiation, given the volume of demands from both sides. The U.S. has already published a list of measures that Mexico has implemented that it considers contrary to free trade, including energy. Several issues must be addressed as a “sort of condition to begin the review process,” he said. “At the end of the day, it will be a negotiation in which the parties will make concessions, not necessarily on energy matters, but they will seek to reach an agreement,” Jiménez added.

The Office of the U.S. Trade Representative in January is expected to release the results of a December hearing that gathered public comments on the USMCA, offering an early signal of how confrontational or flexible Washington may be heading into the review, Smith Ramos said.

A similar assessment is expected to be issued in January or February by Ebrard’s Economy Ministry.

Smith Ramos said that despite tariff turmoil and uncertainty under the Trump administration, Mexico received $40.9 billion in foreign direct investment between January and September, already surpassing the $36.8 billion it received in all of 2024. “It seems international investors continue betting on Mexico” he said, “because they believe there is sufficient certainty that, whatever happens, some form of special free-trade arrangement between Mexico and the U.S. will remain.”

Reporting by José Luis Adriano and Karla Omaña, Edited by Jeffrey Barber, jbarber@opisnet.com