The Future of North American Trade

The upcoming 2026 USMCA review is shifting toward a pragmatic, limited update rather than the ambitious overhaul initially anticipated. While the base case remains a preservation of North American trade integration, complex new chapters on AI, critical minerals, and formal guardrails against Chinese investment in Mexico are increasingly likely to be deferred or handled through side agreements. Key disputes regarding auto rules of origin and labor enforcement are expected to be resolved, yet the pace of institutional alignment is slowing. Mexico maintains essential tariff-free access, supporting manufacturing stability in autos and electronics, though falling short of a full nearshoring acceleration. Because the agreement’s 10-year escape clause ensures enforcement through 2036, the structural risk of a disruptive trade shock remains low, even as negotiators potentially extend timelines to manage lingering uncertainties. This measured outcome reduces market volatility while leaving deeper strategic integration for a longer-term horizon.