Five Years of the USMCA: Trade Progress and Lingering Risks for the Mexican Economy
The United States-Mexico-Canada Agreement (USMCA) marked its fifth anniversary amid growing uncertainties about its future and the challenges facing regional economic integration. While the trade deal has spurred significant growth in commerce among the three countries—surpassing $1.6 trillion in 2024, according to official data, a 33% increase compared to 2019—recent diplomatic tensions and the adoption of protectionist policies have cast doubt on the deal’s stability and long-term outlook.
Mexico holds a key position amid this uncertain environment. Concerns from the U.S. over alleged illicit financial flows within Mexico’s banking system have led to stricter monitoring measures and increased pressure for stronger bilateral cooperation on security and regulatory compliance. At the same time, trade frictions with Canada have resulted in debates around digital services taxes and sectoral policies, though both countries have shown a willingness to negotiate ahead of the formal review scheduled for 2026.
The political climate in the United States adds another layer of complexity. Election-year rhetoric has scrutinized the performance of the USMCA, and there have been threats—mainly from former President Donald Trump—to impose new tariffs or even withdraw from the agreement if U.S. interests are not prioritized. Although Mexico has managed to lower its effective tariff rate due to better compliance with the agreement’s rules—the ETR dropped from 12.1% in 2023 to 9.5% in 2024 according to Fitch Ratings—ongoing tariff adjustments, particularly in strategic sectors like steel, aluminum, and automotive, are impacting competitiveness and fueling uncertainty for exporters.
The USMCA has been an important source of macroeconomic stability for Mexico. Half of Mexico’s exports to the U.S. now operate under its rules, strengthening value chains that are strategic vis-à-vis Asia and contributing to job creation and foreign investment. However, the risks remain significant. Should new episodes of protectionism materialize, the cost could appear as slower economic growth, reduced investment, and inflationary pressures, along with the potential fragmentation of the North American trade bloc.
Looking ahead to the scheduled 2026 review, Mexico faces the challenge of strengthening its position by diversifying its export base, ensuring continuous regulatory compliance, and fostering competitive conditions relative to other global markets. Sensitive topics—such as rules of origin for automobiles, national energy policy, and labor conditions—will continue to shape the negotiation agenda, especially as the U.S. political climate will be decisive in determining the deal’s course.
In summary, while the USMCA has cemented a robust trade flow and deepened regional integration, political and economic factors—particularly in the United States—put its full operation and permanence at risk. Mexico will need a proactive strategy to maintain certainty moving forward, accelerating needed reforms, diversifying its markets, and furthering integration with its North American partners.
The five-year balance shows significant progress, but it also makes clear that the stability of the trade framework depends far more on the political environment than on the economic achievements attained so far. The main challenge will be ensuring that the benefits of the agreement are not eroded by external pressures, and that Mexico remains attractive on the global stage.
