6 top issues to review in US-Mexico-Canada trade

The Hill

6 hours ago

The second Trump administration has come out swinging on trade. New tariffs — some targeted, others startlingly wide-ranging and broad — have reignited uncertainty across global supply chains and forced America's economic allies to find ways of placating the White House.
For Canada and Mexico, Washington's partners in Trump's U.S.-Mexico-Canada Agreement, this has been a stark reminder of how easily trust can erode, even in the most integrated trade relationship in the world.
But the first formal review of the agreement in 2026 offers the opportunity to not only overcome this uncertainty but also to build for a stronger shared future.
In terms of trade, the stakes could not be higher: Mexico and Canada are the United States' no.1 and no. 2 trading partners. In 2024, U.S.-Mexico trade reached $840 billion; with Canada, the number was $761 billion (compared with $582 billion in two-way trade with China).
These are intricate trading relationships, and the review process will be more than a box-checking exercise. Anxiety over the process is already rampant in Washington and among investors.
But the U.S.-Mexico-Canada partners don't just trade enormous amounts with each other; they build things together and export them to the world through complex supply chains. Therefore, the review process is also a chance to modernize North America's trade architecture, reinforce strategic industries, and rebuild the foundations of regional trust and cooperation.
America's competitiveness depends heavily on the integrated North American manufacturing platform, and thus on the success of Mexico and Canada, its partners.
There are many contentious issues requiring resolution, too many to mention here. However, we can currently identify six key areas where substantial effort will be necessary.
Addressing these areas holds the potential for significant improvements in regional competitiveness and economic security.
A foreign investment committee for North America. The issue of competition with China was marginally addressed in Article 32.10 of the U.S.-Mexico-Canada Agreement with a provision concerning trade with 'non-market economies,' but the topic of Chinese investment in the region was not covered. The Committee on Foreign Investment in the United States, an interagency body, is tasked with that role to assess and mitigate national security risks within the U.S., while Canada has a similar entity. Mexico, however, has not established such a mechanism. Implementing a trilateral or regionally coordinated investment screening system, tailored to the shared interests and legal frameworks of the U.S., Canada and Mexico, could address this gap effectively.
Rules of Origin Are Only as Good as Our Tools to Enforce Them. The North American agreement's stronger rules of origin, especially for automotive and steel products, were a signature achievement. But enforcement remains a weak link. Self-certification and uneven oversight have created loopholes for transshipped and misclassified goods. To address this, North America should move toward a shared product passport system — a digital framework that enables real-time verification of supply chain data and regional content. Without it, even the best rules risk being undermined by outdated systems and bad actors.
A Reinvigorated Approach to Energy and Critical Minerals. Chapter 8 of the U.S.-Mexico-Canada Agreement was a compromise: The U.S. and Canada sought more liberalization and investment protections in the energy sector, while Mexico prioritized sovereignty. The review must establish commitments to cooperation, regulatory coordination and investor protections, especially in Mexico, where uncertainty has hindered investment. But just as importantly, there is now an opportunity to establish institutionalized cooperation between the partners in building regional critical minerals supply chains, a key area of strategic competition with China.
Dispute Resolution Must Be Enhanced. When the USMCA replaced the North American Free Trade Agreement, dispute settlement mechanisms were seriously weakened. Over the past six years, the need for stronger investor protections and legal recourse in the face of expropriation and regulatory abuse has become clear, especially in the case of Mexico. The agreement's dispute settlement systems must be strengthened to ensure they are timely, impartial and resilient against political pressure. If North America wants to remain an attractive investment environment, confidence in the rules must go hand in hand with confidence in how they're enforced.
Labor Standards and the Gap Between Words and Action. The current agreement's labor provisions marked a leap forward from NAFTA. But implementation is inconsistent, to say the least. Labor reforms in Mexico are still catching up with commitments. The review is an opportunity to close the implementation gap — and to make enforcement credible across all three countries, for the good of workers across the region. Mexican President Claudia Sheinbaum should seize the opportunity to advocate for better working conditions for her people.
Don't Ignore Digital Trade. The current agreement's digital trade provisions, contained in Chapter 19, are already aging. They lack the clarity and scope needed for today's data-driven economy, especially on cross-border flows and artificial intelligence. Mexico lags far behind the U.S. and Canada, but has a dynamic startup and entrepreneurial culture in some of its major cities, in part spurred on by digital nomads now living there. Harnessing the combined potential of the three countries and setting common standards and rules will benefit the entire regional economy and greatly assist in the intensifying tech race with China.
The early days of the Trump administration's second term have strained North American cooperation, but the review is a chance to reverse that trajectory. It can help the U.S., Canada and Mexico recommit to a shared vision of prosperity, one grounded in transparency, innovation, and resilience.
In 2020, the U.S-Canada-Mexico Agreement was sold as a modernization of NAFTA. In 2026, its review must become a modernization of our shared commitment to lead.
Let's not settle for maintenance. Let's build something stronger.
Duncan Wood is CEO of Hurst International Consulting and an independent analyst focused on North American trade, energy, and supply chain security.