What the USMCA Shake-Up Means for Packaging
North American trade has entered one of its most uncertain periods in decades. The trade agreement that has governed the flow of goods between the United States, Mexico, and Canada since 2020 was not renewed on its scheduled review date. Three rounds of renegotiation have taken place since May. A fourth round is confirmed for September in Washington, D.C. And Canada, which supplies 56% of U.S. aluminum imports, is still not at the bilateral negotiating table.
For food and beverage producers that source aluminum cans, can-ends, steel closures, and other metal packaging components, this is not an abstract trade policy story. It is a supply chain planning issue that is unfolding right now, with real cost implications that are already showing up in purchasing decisions across the industry.
This article covers where things stand as of July 30, 2026, what has changed in Section 232 tariffs, and how packaging buyers should be thinking about their sourcing strategy while negotiations continue. For context on how aluminum pricing is being affected simultaneously, see our overview of recent aluminum price movements.
Canada supplies 56% of U.S. aluminum imports. It is not yet at the bilateral negotiating table. For packaging buyers sourcing aluminum components with Canadian content, that gap matters.
What Happened on July 1, 2026
The United States-Mexico-Canada Agreement contains a built-in review mechanism under Article 34.7. On July 1, 2026, the first mandatory six-year joint review took place. The U.S. Trade Representative formally stated that “the United States did not agree to renew the USMCA in its current form.” The consequence of that decision is significant: instead of a clean 16-year extension through 2042, the agreement now enters a cycle of mandatory annual reviews that could run through 2036 unless all three parties agree to a new extension.
The USMCA remains fully in force. Existing tariff preferences, rules of origin, investment protections, and dispute settlement mechanisms all continue to apply. No trade rules changed on July 1. What changed is the certainty around what those rules will look like in the years ahead, and for businesses building 2027 and 2028 sourcing strategies, that uncertainty is itself a planning variable.
Three Rounds of Renegotiation: Where They Stand
The U.S. and Mexico have held three bilateral negotiating rounds since May 2026. Round 1 took place May 28-29 in Mexico City, focusing on automotive rules of origin, steel and aluminum, and economic security. Round 2 was held June 16-17 in Washington, D.C., adding agriculture and a level playing field to the agenda. Round 3 concluded July 23 in Mexico City after three days of discussions between Ambassador Greer and Mexican President Claudia Sheinbaum and Economy Secretary Marcelo Ebrard, covering steel and aluminum derivative products, automobiles, economic security, labor, agriculture, and electronic payment services.
According to the official joint statement, the two sides made progress across the shared agenda, with both governments reaffirming their commitment to strengthening North American manufacturing and reinforcing regional supply chains. A fourth round of talks is confirmed for Washington, D.C. in September 2026, where negotiators will continue work on unresolved issues.
Canada has participated in the July 1 trilateral review meeting but has not yet entered substantive bilateral text-based negotiations with the United States. Canada’s trade minister has confirmed that Canada’s priority is addressing U.S. sectoral tariffs on steel, aluminum, automobiles, and lumber. Until Canada is brought into bilateral talks, the full picture of what a revised USMCA will look like for aluminum supply chains remains incomplete.
Three rounds of U.S.-Mexico talks have produced documented progress on steel and aluminum. Round 4 is confirmed for September. Canada, the largest U.S. aluminum supplier, is still waiting to enter bilateral negotiations.
The Section 232 Tariff Picture: What Has Changed
The USMCA renegotiation does not exist in isolation. It runs alongside a series of significant Section 232 tariff changes that have already reshaped the cost structure for aluminum packaging components. Understanding both tracks together is essential for packaging buyers making sourcing decisions right now.
The most consequential structural change came on April 2, 2026. A presidential proclamation effective April 6 changed how Section 232 tariffs are assessed: duties now apply to the full customs value of imported steel, aluminum, and copper products rather than only to the value of the metal content. For finished goods containing aluminum, this is a meaningful increase in effective tariff exposure. The proclamation introduced a tiered rate structure ranging from 10% to 50% based on product classification and origin, with a de minimis exemption for products where applicable metal content is less than 15% of total weight.
On June 1, 2026, a further proclamation adjusted the Section 232 structure again, effective June 8 through December 31, 2027. The changes lowered or eliminated tariffs for certain derivative products with moderate metal content, added new products to the scope of tariffs, and updated the threshold for U.S.-origin metal content that qualifies for reduced rates.
Most recently, on July 20, 2026, President Trump signed a new proclamation creating an aluminum onshoring investment incentive program. Companies that commit to building, expanding, or refurbishing U.S. primary aluminum production facilities and receive Commerce Department approval can import primary aluminum at half the otherwise-applicable Section 232 tariff rate, in quantities tied to their facility’s anticipated annual output. Construction must begin by January 20, 2029. This program does not reduce tariff rates for the broader market. It creates a firm-specific, quantity-limited pathway for companies making qualifying domestic investments.
The combined effect of these changes is a tariff environment that is more complex and more costly than it was 18 months ago, with multiple rate structures, new full-value assessment rules, and a new investment incentive program all running simultaneously. For packaging buyers, understanding which of these regimes applies to their specific supply chain requires knowing the origin, classification, and metal content of every component in their procurement mix.
New Canada Tariffs: A Separate Risk Layer
On July 20, 2026, the same day as the aluminum incentive proclamation, President Trump invoked Section 338 of the Tariff Act of 1930 to impose 50% additional tariffs on approximately $20 billion in annual Canadian imports, effective August 19, 2026. The tariffs apply even to USMCA-compliant goods in the named categories, which represents a significant departure from the trade framework that has governed North American commerce since 2020.
The categories targeted include wine, alcoholic beverages, dairy products, and a range of consumer and manufactured goods. Critically, goods already subject to Section 232 tariffs, including steel and aluminum, are explicitly excluded from the new Section 338 duties. This means the new Canada tariffs do not add an additional layer on top of existing 232 tariffs on metal packaging components. However, the broader signal is significant: the U.S. is willing to override USMCA protections via Section 338 when it determines a bilateral dispute warrants it. That precedent matters for supply chain planning.
For food and beverage producers sourcing from Canadian suppliers, the practical question is not only what tariffs apply today but what categories could be subject to future Section 338 actions. The August 19 effective date gives both governments a brief window to negotiate before the higher rates apply.
What This Means for Beverage Packaging Buyers
Taken together, the USMCA non-renewal, the Section 232 restructuring, the new aluminum investment program, and the July 20 Canada tariff proclamation paint a clear picture: the North American trade environment for metal packaging components will remain in active flux through at least September 2026 and most likely well into 2027.
For food and beverage producers managing can, can-end, crown, and closure sourcing, several things are worth acting on now rather than waiting for resolution.
First, know your supply chain’s country of origin exposure. If your aluminum packaging components include Canadian-origin primary aluminum, the Section 232 tariffs at 50% are already a cost factor, and the USMCA renegotiation’s outcome will determine whether relief is available. If your components include Mexican-origin content, the same tariff environment applies and the bilateral negotiations underway are directly relevant to your cost structure.
Second, understand the new full-value assessment rule. Since April 6, 2026, Section 232 tariffs apply to the full customs value of imported metal products rather than just the metal content. For finished packaging components, this changes the effective tariff rate meaningfully. Buyers who have not recalculated their landed cost under the new rules should do so.
Third, monitor the September Round 4 outcome. The Washington round of U.S.-Mexico talks will be the next significant data point for understanding how quickly the aluminum tariff situation might be resolved, and whether Canada enters bilateral negotiations. Both developments would directly affect the availability and cost of aluminum packaging components across North America.
Capsules & Closures works with food and beverage producers across North America on cans, can-ends, crowns, ROPP closures, and a full range of metal packaging components. If the current trade environment is raising questions about your sourcing strategy or your cost projections for the back half of 2026 and into 2027, we are ready to have that conversation.
FAQs
Q: Is USMCA still in effect after the July 1, 2026 review?
Yes. The USMCA remains fully in force. The U.S. decision not to renew the agreement in its current form did not terminate or suspend it. All existing tariff preferences, rules of origin, and trade protections under the agreement continue to apply. What changed is that the agreement now enters a cycle of mandatory annual reviews through 2036 unless all three parties agree to a new extension, creating ongoing uncertainty around what the agreement’s terms will look like in future years.
Q: How do the Section 232 tariffs affect aluminum beverage cans and closures?
Section 232 tariffs currently stand at 50% on primary aluminum imports from most countries. As of April 6, 2026, these tariffs apply to the full customs value of imported aluminum products rather than just the metal content, which increases the effective tariff burden on finished packaging components containing aluminum. A tiered rate structure introduced in April 2026 ranges from 10% to 50% depending on product classification and origin. Products where applicable metal content is less than 15% of total weight by a de minimis exemption. Buyers sourcing aluminum cans, can-ends, and closures with international metal content should recalculate landed costs under the new full-value assessment rules.
Q: When is the next USMCA negotiating round and what will it cover?
The fourth round of bilateral U.S.-Mexico negotiations is confirmed for Washington, D.C. in September 2026. It is expected to continue discussions on steel and aluminum derivative products, automotive rules of origin, economic security, labor, and agriculture… the same agenda that has carried through the first three rounds. Canada has not yet entered substantive bilateral text-based negotiations with the United States as of July 30, 2026. The next scheduled annual joint review of the full trilateral agreement is July 1, 2027.
About Capsules and Closures
Capsules & Closures, LLC is a leading U.S.-based supplier of lids, crowns, closures, bar tops, cans, and capsules for the food and beverage industry. For questions on sourcing, pricing, or market conditions, contact Capsules & Closures directly.
