WASHINGTON—On July 1, US, Mexican, and Canadian officials are meeting to discuss the United States–Mexico–Canada Agreement (USMCA). After six years in force, the trilateral trade pact is up for its mandatory review that will help decide if it should be extended for a further sixteen years.
As this review begins, it is important to keep in perspective what is at stake beyond the specific tariff rates and changes to rules-of-origin criteria. For most of the period following World War II, it was easy to treat trade and security as separate domains. Under the General Agreement on Tariffs and Trade and its successor, the World Trade Organization, and with the United States underwriting an open trading system, that separation came to feel natural.
That belief was always more comfortable than correct. Eighty years ago, in National Power and the Structure of Foreign Trade, American economist Albert Hirschman showed that the pattern of a nation’s trade is an instrument of power: Whoever supplies your essentials or buys your exports gains leverage over you. Recent years have not revealed a new truth so much as revived the relevance of an old one. Tariffs are wielded as national-security instruments; supply chains are treated as strategic terrain. The current generation has simply been reminded that trade and security were never separate, and every major economy is now adapting.
Re-recognizing how interconnected trade and security are reveals an important reality: Of all the great economic blocs, North America is the one best built for this world—less because what its countries are planning to do, and more because of what they already have.
Look at the other major economies—close allies such as Japan, South Korea, and the European Union, as well as a rival like China. All are formidable exporters. They rely on other nations for most of their energy and much of their food. They all also have aging workforces and no close neighbor to replenish them. When trade is a lever of power, that dependence is not an inconvenience—it is a material risk.
The opportunity for North America
The USMCA review comes at a time of great global risks and opportunities, and North America is uniquely poised to benefit if it gets the USMCA review right, and if it furthers trade and integration beyond it.
Begin with energy. While other countries rely on imports, North America is a net energy exporter. US natural gas, Canadian hydropower and crude, and Mexican shale gas potential (as well as solar and wind resources) offer the promise of energy security across the region.
Then turn to food security: Japan, South Korea, and China are among the world’s largest food importers; North America feeds itself—grains, protein, produce, dairy—and much of the world besides. Its edge lies in its complementarity: different climates, staggered seasons.
Critical minerals for batteries, magnets, and advanced electronics constitute a third modern necessity alongside fuel and food. China’s dominance in critical minerals lies less in mining them than in acquiring, stockpiling, and refining them. Here, North America’s advantage is real but unrealized: Most, if not all, of the strategic inputs it needs are within the region, with refining capacity anchored in Canada. Dependence on China is not a foregone conclusion. In February of this year, the United States and Mexico launched a Critical Minerals Action Plan. This is an important start, but the region’s combined potential is not close to fully utilized.
And then yet another advantage: people. As China, Japan, Korea, and European countries grow old, North America has a younger Mexican workforce whose skills match the needs of an aging United States and Canada in agriculture, construction, and healthcare and elder care. This is not a case for open borders or any migration policy; it is an observation about complementary endowments.
Put it all together: North America is roughly 30 percent of global output, 500 million consumers, and the most deeply integrated supply chains on earth. It is large enough to produce at scale and to absorb much of what it makes, substituting regional goods for imports it would rather not source from elsewhere in the world. Energy, food, minerals, people, scale: North America has all five. Most other regions and major powers have a significant vulnerability on at least one of these fronts.
USMCA renewal is the key to regional integration
So why does this not yet feel like a winning hand? Because too often leaders and policymakers treat the tools of trade and security as tradeoffs instead of complements. Section 232 steel tariffs, for example, have stood for seven years across three administrations, lately at 50 percent. They are aimed at the United States’ closest, most integrated partners rather than the distant producers distorting the market. And worse than any single tariff is the uncertainty around foreign economic policy: A known cost can be planned for. An unknowable one cannot. Investment in factories and other fixed assets cannot be fully deployed in a state of heavy uncertainty.
Trade and security tools work best when they are carefully crafted, targeted, calibrated, and applied. That work has begun, for now bilaterally. The Adrienne Arsht Latin America Center’s US–Mexico task force, on which I serve, has sketched part of the agenda. It includes simpler rules of origin and modern customs operations that use blockchain and artificial intelligence to verify where goods truly originate. It also includes a common external tariff on steel and import substitution that is targeted and time-bound rather than blanket protectionism. There are also issues beyond the immediate scope of the USMCA to improve, such as energy security, customs cooperation, and investment screening. Yet Washington and Mexico City cannot secure North America on their own. The prize is trilateral, and nothing the two countries do should fracture the three-way architecture—with Canada—that gives the region its weight in the world.
That is the test the three governments face as the USMCA review begins. The key is to facilitate greater intra-regional trade and investment as a bulwark against unfair international competition. This will require eliminating or reducing tariffs and quotas—an important and practical next step. The larger project, however, will be to establish a sense of regional policy certainty with the USMCA as an anchor.