USMCA Review Fuels Trade Uncertainty as HVAC Industry Faces New Tact on Tariffs

That risk centers on the fate of USMCA, which currently shields many HVAC products manufactured in Mexico from tariffs. Industrial analyst Brian Bernard of Morningstar told Facilities Dive that roughly 40% of commercial HVAC systems sold by major U.S. players – such as Trane Technologies, Carrier, Johnson Controls, and Lennox – are produced in Mexico and are believed to comply with USMCA’s rules. “As long as USMCA stands, these manufacturers should be okay,” Bernard said in 2025. However, the Supreme Court’s ruling on President Trump’s tariff authority renewed his ambition to leave or renegotiate the USMCA – a power he holds undisputed control over, similar to national security tariffs on steel and aluminum. Section 232 tariffs on steel and aluminum, and Section 301 tariffs on Chinese imports, remain in place.

HVAC manufacturers began turning to Mexican facilities as early as Trump’s first term to avoid the impact of tariffs on imports from China and other countries. Carrier, a leader in the industry, announced its plan in 2016 to move air conditioning equipment manufacturing from Indianapolis to Monterrey, Mexico, citing the risk of a 35% tax on goods crossing back into the U.S. as a key factor. President Trump himself underscored this tariff threat during his campaign, warning that “every single unit that you make and send across our border … you’re going to pay a 35 percent tax” if production remained outside Mexico.

Renegotiating the USMCA isn’t solely on the White House’s agenda – elements of the agreement also draw concern from Democrats like Arizona Senator Ruben Gallego, who sees the mandatory six-year review as a chance to leverage labor concessions. In a recent letter to President Trump and U.S. Trade Representative Jamieson Greer, Gallego and other Arizona leaders urged the administration to use the review to “rebuild the U.S. manufacturing sector, strengthen border communities, and address the underlying causes of illegal migration.”

Efforts to renegotiate the USMCA began during the Biden administration and have since evolved around President Trump’s priorities. Negotiations with Canada have repeatedly stalled, particularly over dairy market access and energy exports, delaying a final agreement. Mark Carney, Canada’s prime minister, has emphasized the need to modernize the pact while preserving independence. Meanwhile, Mexican President Luis Hernández has publicly advocated for deeper cooperation to protect jobs on both sides of the border and to address shared challenges like illegal migration and wage disparities, helping to maintain momentum on the Mexican side of the talks.

This ongoing stalemate adds uncertainty for sectors like HVAC, heavily reliant on tariff protections under USMCA, complicating manufacturers’ efforts to navigate rising costs and complex supply chains.

The letter from Gallego calls for establishing a minimum wage standard and strengthening “rules of origin” to prevent China from exploiting Mexico as a backdoor into the U.S. market. It praises the Rapid Response Mechanism for helping report worker abuses and delivering “real gains,” but warns that enforcement challenges now weaken its impact.

It also highlights the urgent need to “invest in border community infrastructure” to support the steady flow of goods and jobs, contrasting these priorities with the administration’s “broad, on-again, off-again tariffs” that have “spiked input costs” and created uncertainty for investors.

Tariffs on components from China and other Asian countries remain a wildcard. Ductless HVAC products, largely imported from Asia, face significant tariffs ranging from about 20% to 50%, depending on the product and country of origin. Meanwhile, key inputs like aluminum, copper, and to a lesser extent steel, have seen price increases due to tariffs – though a softer economic outlook has recently eased prices somewhat.