TRADETrump and the Future of the USMCA
The joint review of the United States-Mexico-Canada Agreement (USMCA) will be influenced by the discussions to reshape North American trade, migration, and security, as well as the need to address China’s growing influence in regional supply chains.
The United States-Mexico-Canada Agreement (USMCA), which underpins North America’s economic integration, requires a joint review by July 2026 and agreement by all three parties to continue. This review now looks poised to become more of a full-fledged renegotiation as President Donald Trump seeks to leverage the discussions to reshape North American trade, migration, and security, as well as address China’s growing influence in regional supply chains.
What Is the USMCA?
The USMCA replaced the North American Free Trade Agreement (NAFTA), signed in 1993. NAFTA created a free-trade zone between the United States, Canada, and Mexico, and established rules to protect intellectual property, investment, workers’ rights, and the environment. During the twenty-five years that NAFTA was in place, North American trade quadrupled, reaching over $1.4 trillion. Still, critics blamed the agreement for U.S. job losses, especially in manufacturing. President Trump took office in 2017 intent on renegotiating NAFTA, calling it “one of the worst trade deals ever made.”
The USMCA entered into force in July 2020 after more than two years of negotiations. The agreement created stronger mechanisms to enforce labor standards, established stricter rules of origin for North American automobiles, expanded U.S. farmers’ access to Canada’s dairy markets, changed dispute settlement processes, and set up guardrails for digital trade and e-commerce. It also introduced a sixteen-year sunset clause and six-year review requirements.
Why Does It Matter?
The USMCA buttresses the United States’ two most important trade relationships, with Canada and Mexico together forming the largest U.S. export market. U.S. companies send more than $800 billion in goods and services—over a quarter of total U.S. exports—to the two countries, over four times what the United States sends to China. Intraregional trade supports more than four million jobs in the United States, roughly half of them in manufacturing.
Over the past five years, the USMCA has helped the United States reduce its supply chain dependence on China. In 2023, Canada and Mexico displaced China as the United States’ top import partners for the first time in two decades, with total North American trade exceeding $1.8 trillion. At the supply chain level, the shift is even more pronounced. In 2020, nearly 40 percent of the value of U.S. auto imports from Mexico originated in the United States, compared to just 2 percent from China.
