When Britain was scrambling to implement Brexit, a senior European negotiator quipped: “They want to move out, but take all our furniture and keep the WiFi password.”
Indeed, the political satisfaction of leaving the European Union was soon surpassed by the economic costs and logistical challenges. Today, almost exactly six years after Britain’s formal departure, a majority of Britons say the decision was a mistake, despite their governments’ efforts to construct a new international architecture to take its place.
While not a perfect comparison, the intensity of North American integration means any attempt to disentangle our markets in the ongoing review of the U.S.-Mexico-Canada Agreement would be far worse, and dangerously disruptive during an important election year – a risk that may ultimately dissuade the Trump administration from killing the deal.
Under the review, the parties have three options as of July 1, 2026: A) extend the agreement as-is for another sixteen years, B) extend the agreement with a “joint review every year” for ten years, or C) terminate the agreement.
Option A is unrealistic in an era when tariff threats are viewed as leverage in Washington. Negotiations are never “finished” with this White House. In fact, President Donald Trump flirted with termination – not for the first time – in early December 2025 and again during a recent Detroit visit. Yet, the U.S. economy depends on cross-border trade and services, demanding a path forward even as political rhetoric distracts.
My bet is on Option B. Jamieson Greer, the U.S. Trade Representative, has recently attempted to soften the edges on withdrawal threats. In Greer’s congressional report last month, he noted that despite the agreement’s “shortcomings…trade within North America is more conducive to bolstering national security relative to trading with other parts of the world.”
This view is reinforced by the 2025 National Security Strategy, which prioritized the Western Hemisphere, as well as economic security. Homeshoring is clearly the Administration’s preference, as opposed to nearshoring. But Ambassador Greer is correct. Integrated North American trade has made the U.S. globally competitive, including with geopolitical rivals like China and has created important export markets for U.S. agriculture.
So why did the U.S. impose tariffs on its USMCA partners? International Economic Emergency Powers Act (IEEPA) tariffs on Canada and Mexico announced days into President Trump’s second term were a shock, but the administration a mere month later exempted goods meeting USMCA rules of origin. This was not due to a surge of goodwill. Rather, political rhetoric hit the wall of economic reality, hurting U.S. companies, farmers, workers, and consumers. The resulting carve-out is a reflection of U.S. reliance on Canada and Mexico, and is the envy of other countries around the world: Just ask South Korea or those in Central America.
The role of concessions
We should anticipate further (likely frequent) withdrawal threats from the White House, but U.S. negotiators know that surging inflation and supply chain disruptions would prove unpopular in a midterm year. Negotiators from all three countries must put ice in their veins and above all preserve integrated North American trade, whether the parties negotiate bilaterally or trilaterally. The renegotiation of the North American Free Trade Agreement, USMCA’s predecessor, was both bilateral and trilateral at times, and aspects of USMCA differ across countries, as in labor standards and investment rules.
This should nudge toward USMCA preservation, despite the challenges posed by ongoing disputes such as Canadian dairy or Mexican energy. Meanwhile, the U.S. is under scrutiny for its interpretation of auto rules of origin and for violating the USMCA through IEEPA tariffs. However, in the current environment – fairly or unfairly — Canada and Mexico must come to the table offering concessions to allow the agreement to survive in a commercially viable way.
As highlighted by Ambassador Greer, national security issues are also at play in the review. Supply chain security is a component but so is addressing drug flows and border issues upon the backdrop of recent U.S. actions in Venezuela and threats against Greenland, with Canada possibly participating in joint European military exercises on the island. In addition, the wisdom of U.S. national security-motivated “232” tariffs on steel, aluminum, autos/parts, copper, wood, and other imports should be tackled. Canada and Mexico have appropriately pointed out that they cannot simultaneously pose a threat to and be a guarantee of U.S. national security, but we may need to pursue 232 relief on a separate path to preserve USMCA.
China as a factor
This agenda is complicated enough, but Chinese involvement in the North American economy must also be managed, a goal with broad bipartisan support in Washington. While Prime Minister Mark Carney recently visited China to deepen trade relations, Mexico moved to increase tariffs by 50% on countries with which it does not enjoy an FTA, seeing China as a source of inputs but also a competitor. We should expect meaningful talks regarding export controls, tariff levels, and inbound investment screening, keeping in mind that recent U.S. deals in Asia featured commitments to take “complementary actions to address unfair trade practices of third parties” and to confront “state-owned enterprises and subsidies.” Discussions over tightening of the rules of origin are already underway to grow North American and U.S. content overall and to ensure Chinese overcapacity does not deploy USMCA as a back door to our market.
In more conventional times, grappling with the China threat and enforcement concerns, including digital trade and labor and environmental standards, would be the focus of this review. These are necessary conversations, but ensuring a predictable investment climate to grow investments and good jobs in North America would be the priority. In today’s unconventional times, it is crucial we remain focused on the economic interdependency between our countries – long-time allies – and the downside to destroying USMCA through withdrawal or tightening its rules of origin so stringently as to make it useless.
As with Brexit, that might feel politically satisfying in the near term for an unabashedly trade-sceptical White House. However, after the political sugar rush, the economic bill comes due, and the American people would ultimately pay the price.
ABOUT THE AUTHOR
Kellie Meiman Hock
Reading Time: 4 minutesMeiman Hock is a former U.S. diplomat and trade negotiator serving throughout Latin America. She is an Adjunct Professor at Georgetown University and on the board of the Inter-American Dialogue.
