Banorte expects T-MEC annual reviews, sees immediate extension as less likely

Grupo Financiero Banorte anticipates that the North American Free Trade Agreement (T-MEC) will likely enter a phase of annual reviews in 2026, rather than securing an immediate extension. This scenario, where the treaty continues in force but becomes subject to recurring negotiations, is considered slightly more probable than a consensus renewal for an additional 16 years.

The first joint review of the T-MEC is set to formally begin on July 1, six years after its implementation. According to Article 34.7 of the agreement, if any party does not express its intention to extend the treaty in writing, it will not automatically terminate. Instead, it will transition into annual reviews until a definitive agreement is reached or until its expiration in 2036.

Banorte suggests this annual review mechanism aligns with the United States' current strategy. Washington may leverage these reviews to renegotiate aspects concerning rules of origin, regional content, economic security, non-tariff barriers, and industrial policy. The outcome will significantly depend on ongoing bilateral discussions between Mexico and the United States, separate from the formal review process.

While the annual review period could serve as a transitional stage toward a consensual extension, Banorte warns of potential risks. The primary concern is not an immediate rupture of the trade agreement, but rather a prolonged period of uncertainty for companies and investors. This could be accompanied by sector-specific adjustments and a gradual increase in non-tariff barriers within the region.