Renew USMCA to Guard U.S. Economic Security

On January 20, 2025, President Trump signed his America First Trade Policy memorandum, reaffirming his first Administration’s position: trade is important for national and economic security.  Therefore, by his own standards (if the Administration is going to be consistent and adhere to its stated goals) Trump should support renewing the United States-Mexico-Canada Agreement (USMCA) for another sixteen-year period.  Furthermore, if Trump intends to adhere to the National Security Strategy released last year and increase the U.S. focus on the western hemisphere, the United States should clearly support renewing USMCA. However, the Trump Administration has not been overwhelmingly consistent in its adherence to stated policy objectives and renewal cannot be assumed.

USMCA, the updated North America Free Trade Agreement (NAFTA), is critical for U.S. economic security.  It has resulted in $775 billion invested in the United States by Mexico and Canada, 55% more investment than before USMCA came into effect in 2020—despite COVID.  USMCA makes North America an attractive cohesive market.  It underpins U.S. economic security through frictionless trade with Canada and Mexico, lowers the cost of doing business, and supports the investment that leads to U.S. economic growth and technological prowess. 

Economic security is not new, the United States has specifically considered the economic welfare of its domestic industries within U.S. trade law since at least 1963.  However, economic security is not always as clearly understood as national security.  During his first term, Trump underscored economic security’s role within national security, though mostly as excuse to impose protectionist tariffs on a relatively small section of imports.  There is no set U.S. definition of economic security and different agencies are responsible for different aspects. Nevertheless, economic security safeguards U.S. economic stability and superiority thereby supporting the innovation and production of U.S. national security technologies; securing supply chains for critical inputs and/or ensuring technological superiority.  This guarantees U.S. firms maintain a cutting edge—especially as compared to strategic rivals’ companies (such as PRC or Russian).  

Economic security protects U.S. companies’ ability to grow and invest both at home and abroad, to create jobs and sustainably drive the economy.  USMCA sets out the economic rules of the road for North America, supporting 13 million U.S. jobs and protecting the top export markets for U.S. agriculture and manufacturing. USMCA is key to U.S. economic security. 

USCMA is different from other U.S. free trade agreements (FTAs) because it has a sixteen-year term, though the Parties (the United States, Mexico, and Canada) can decide to renew the Agreement for another sixteen years after a joint review.  The first review date is coming up: July 1, 2026.  If they don’t agree to renew, the Parties meet annually for the remaining ten years of USMCA’s life before it dies in 2036.  

This first joint review in July is critical.  It gives Trump a chance to act decisively rather than try enticing viewers to stay tuned by keeping them guessing.  He could protect U.S. economic security by clearly stating his intention to renew, defending the predictability and stability that businesses need.  It would be naïve to suggest that no improvements are needed or to suggest that all USMCA commitments have been fully implemented, but to throw it out or substantially renegotiate the deal at this point would be foolhardy, if not dangerous. USMCA should be used and implemented to its fullest before updating, otherwise the updates might be redundant.  Realistically, changes to the Agreement may require legislative approval by any of the Parties.  Given the current political environment it is questionable if any of the three legislative bodies will approve a change, particularly if at Trump’s request.  

USMCA further strengthens U.S. economic security by supporting the growing U.S. demand for critical minerals and energy.  USMCA’s Chapter 28 sets out commitments on good regulatory practices that are critical for developing critical mineral supply chains in North America.  Other provisions protect private investments in oil and gas and ensure tariff-free energy trade.  And while filed complaints allege Mexico’s non-compliance and preferential treatment of domestic energy industries, USMCA creates the forum for remediation. 

The Administration is concerned about critical minerals access, worried that the PRC will cut off exports of refined critical minerals effectively bringing advanced manufacturing to a halt.  Thus, certain critical minerals are exempt from the recent Section 122 tariffs and the United States Trade Representative sought comments to help build a critical minerals marketplace to strengthen the supply chains.  According to the Mining Association of Canada, Canada is the world’s leading producer of potash and the fifth largest producer of graphite and nickel.  One fourth of the world’s aluminum is produced in Canada.  Mexico is world’s largest producer of silver and is a global leader in the production of lead and copper.  It is ambitious, but if the Parties can live up to the goals outlined, USMCA can support the regulatory framework needed for more stability in the critical mineral supply chain.

The United States needs to update its energy infrastructure.  Renewing USMCA will give business the necessary certainty for new energy investments.  Increasing energy demand, particularly to meet new and evolving tech needs, requires a secure North American energy supply.  Predictable cross-border energy flow makes the region more resilient and lessens the dependence on energy from other sources that might be more vulnerable to hostilities. 

An existing FTA does not stop Trump from imposing tariffs or attempting to blow up a trading relationship—just ask South Korea.  This begs the question, why does Trump continue to grant tariff exemptions to USMCA-compliant goods?  It could be pride in his own agreement, or it could be the recognition of USMCA’s importance for U.S. economic security.  As the Administration touts a greater regional focus, the logical recourse is to shore up North American economic and national security.  The best way to do that is to ensure USMCA continues.  Without USMCA, the U.S. economy loses the keystone of U.S. economic security. 

Margaret Cekuta is an expert on trade policy, she has worked on international trade issues since 2014 in both government and the private sector.  She holds a BSFS and MALS from Georgetown University.