The new Trump administration is making waves in trade. With fresh tariffs—some specifically aimed, others surprisingly broad—there’s a cloud of uncertainty hovering over the global supply chain. Businesses are now scrambling to align their strategies with the White House’s stance toward American economic allies.
The partnership between the U.S., Canada, and Mexico, fostered by the US-Mexico-Canada Agreement, serves as a reminder of how fragile trust can be, especially in deeply integrated trade relationships.
Yet, the first formal review of the 2026 agreement offers a chance not only to navigate this uncertainty but also to forge a stronger, more collaborative future.
When it comes to trade, the stakes couldn’t be higher. Mexico and Canada rank as the U.S.’s first and second largest trading partners respectively. In 2024, trade between the U.S. and Mexico soared to $840 billion, while trade with Canada reached $761 billion, compared to just $582 billion with China.
These relationships are anything but simple; the review process is more than just a governmental formality. Concerns have already begun to emerge among Washington and investors regarding its effectiveness.
Moreover, the U.S., Mexico, and Canada are not just trading vast amounts; they collaborate on manufacturing and export products through intricate supply chains. This review can act as a catalyst for modernizing North American trade infrastructure, enhancing strategic industries, and restoring regional trust.
American competitiveness hinges significantly on integrated manufacturing with its North American partners.
While numerous contentious issues await resolution, six significant areas stand out that require focused attention.
Tackling these areas could dramatically uplift regional economic competitiveness and security.
- North American Foreign Investment Committee. The competition with China touches on Article 32.10 of the US-Canada agreement, addressing trade relations with “non-market economies.” However, it doesn’t cover Chinese investment in the region. The Foreign Investment Committee in the U.S. is in charge of evaluating national security risks, and Canada has similar bodies, but Mexico lacks this mechanism. Filling this gap through trilateral or regionally adapted investment screening processes could align with the mutual interests across these nations.
- Strengthening rules of origin. The robust rules of origin set by the North American agreement, particularly for automobiles and steel, are commendable. Unfortunately, enforcement has been less than effective. Issues with self-certification and inconsistent monitoring have allowed loopholes for misclassified goods. Moving toward a shared product passport system—a digital framework for real-time supply chain data verification—will be crucial. Without such measures, even the best rules could falter due to outdated systems or dishonest participants.
- Reevaluating energy and critical minerals policies. Chapter 8 of the US-Canada Agreement reflected compromises, balancing U.S. and Canadian interests for energy liberalization against Mexico’s desire for sovereignty. This review should focus on fostering cooperative commitments, necessary regulatory changes, and investment protective measures in Mexico, where uncertainties are stifling investments. There’s also a chance to enhance collaboration in building key mineral supply chains that are vital in the competition with China.
- Improving dispute resolution mechanisms. The shift from the North American Free Trade Agreement to USMCA has diminished the effectiveness of conflict resolution provisions. Recent years have highlighted the need for stronger investor protections, particularly in Mexico, to guard against expropriation and regulatory overreach. To maintain an attractive investment climate, it’s vital that the dispute resolution process is fair and shielded from political influence.
- Bridging the gap in labor standards. Current labor regulations are an improvement over NAFTA, but execution remains inconsistent. Mexico’s progress on labor reform is still lagging. This review represents a critical opportunity to ensure uniform enforcement across all three nations, ultimately benefiting workers region-wide. Mexico’s leadership should prioritize better labor conditions for its citizens.
- Digital transactions must not be overlooked. The digital trade provisions in Chapter 19 are becoming outdated. They don’t adequately address the needs of today’s data-oriented economy, especially concerning cross-border data flows and artificial intelligence. Though Mexico trails behind the U.S. and Canada, it boasts a vibrant startup culture in several cities. Harnessing each country’s strengths to create common standards could significantly boost the regional economy and bolster competition against China.
The initial phases of the Trump administration’s second term reveal unease surrounding North American collaboration, yet this review could steer it towards a more favorable path. It has the potential to forge a shared vision of prosperity grounded in transparency, innovation, and resilience.
The US-Canada-Mexico agreement was introduced as a way to modernize NAFTA in 2020. In 2026, it’s essential that the review further develops this shared commitment.
Why settle for the status quo? Let’s aim to build something impactful.
