Not the time to cement North America’s fate
Mexico, the United States, and Canada would be making a mistake if they extended the USMCA for 16 years. They should opt for a system of annual reviews
The future of U.S. global competitiveness hangs in the balance as the United States-Mexico-Canada Agreement’s July 1 review deadline fast approaches and formal U.S.-Mexico negotiations begin Monday. Simply put, the United States can achieve neither the scale nor the economic differentiation needed to compete with China without deepening the close collaboration that has defined much of North America’s past 35 years.
For those who understand the importance of the U.S. relationship with Mexico and Canada – its two largest trade partners – it is tempting to hope against hope the countries will choose stability over fracture and extend the agreement for another 16 years.
They would be wrong to do so and should instead bet on a period of annual reviews instead of grasping at a fleeting illusion of stability.
Annual reviews are not a good idea, but they likely represent the shortest path to the kind of essential alignment needed to promote shared, sustainable economic growth across the United States, Mexico, and Canada.
As the past 500 days have demonstrated, with a USMCA he negotiated and signed into law, there is no magic piece of paper that will constrain this president of the United States. Unpredictability is President Donald Trump’s stock and trade and will be until 12 PM on January 20, 2029 when his successor takes the oath of office. He navigates all relationships by imbuing them with instability; witness his management of the U.S.-UK relationship or the U.S. relationship with NATO. The same will be true in North America beginning July 2 whatever the formal paperwork underpinning the North American commercial relationship.
All this, despite the fact that without deep collaboration with its neighbors, the United States cannot sustain existing supply chains in crucial sectors like autos, aerospace, energy, and medical supplies, let alone create new ones in critical minerals, semiconductors, and other high-end technologies independent from China. While annual reviews would temporarily rob private and public sector decision makers of the certainty and predictability needed to make capital allocation and public investment decisions, they may be the least harmful path forward.
Annual reviews would open the way for the next U.S. administration to engage in a rapid revitalization of the USMCA driven by national interest and create the possibility for Mexico and Canada to have a reliable negotiating partner with whom to cut a deal that ensures North America operates as a coordinated engine for democratic, sustainable, shared economic prosperity. Such a path could make way for the meaningful stability the U.S. economy needs to deliver for workers and consumers as soon as possible.
A rapidly negotiated revitalized USMCA would provide any new non-Trumpian administration, regardless of party, a running start at a high-impact vehicle to define a new place in the world for the United States. To do so, an updated agreement must be accompanied by aligned industrial, tariff, and in-bound investment policies that shore up a robust interest-based partnership that promotes shared prosperity in each country and maximizes the ability to compete with China.
Beyond China, such alignment is fundamental to navigating the disruptions of a technological revolution unfolding at an unprecedented pace. A USMCA that establishes a common approach to meaningfully protecting labor rights and environmental protections as well as to effectively fostering resilient, innovative auto-, aerospace-, medical supply, digital service and other sectors must be coupled with policy alignment within and beyond the agreement on renewable- and traditional-energy cooperation, and AI and quantum computing regulatory frameworks.
Alignment should also address core concerns that have arisen in both the United States and Mexico regarding institutional hollowing out that holds back broadly shared economic growth and hamstrings the ability to meaningfully check the concentration of economic, political, and technological power in few hands. It should also include at least some of the basic tenets of security cooperation, as significant security challenges face all three countries and reduce economic and commercial potential.
Robust North American cooperation in a fragmented and rapidly changing world is unquestionably in the U.S. national interest. Achieving it requires strategic patience, not panic, as the United States, Mexico and Canada determine the fate of its foundation.
The skepticism of its closest neighbors will be hard enough to overcome in 2029 in ways that enhance U.S. interests; it should not be reinforced by saddling future governments with a deal unlikely to be respected by the United States itself in the interim.
