Eight years ago, in the second year of U.S. President Donald Trump’s first term in office, North America was in a state of flux. The terms of the North American Free Trade Agreement (NAFTA) that had governed regional trade for a quarter century were being renegotiated. Whether the result would be a new NAFTA, or the end of NAFTA, was uncertain. The private sector paused investment until the outcome was clearer, and risk could be estimated.
Today, the Brookings Institution presents its 2026 USMCA Forward report, and a similar state of flux recurs. It is unclear whether the outcome of the first-ever joint review of the United States–Mexico–Canada Agreement (USMCA) will produce a renewal, revision, or termination of the agreement that was one of the most significant achievements of the first Trump administration.
Setting aside the uncertainty that hangs over this first-ever review of USMCA, it is worth acknowledging that the review itself is a positive development. NAFTA, like the Canada–United States Free Trade Agreement that preceded it, had no provisions for updates or adjustments. The conventional wisdom in Washington was that reopening NAFTA would precipitate its collapse. Yet because it had no mechanism for formal updates—and U.S. administrations under presidents of both parties agreed that it could not be reopened—NAFTA could not adapt to e-commerce, digital trade, or artificial intelligence and their impact on design and intellectual property protections. The USMCA corrects this shortcoming with the six-year review process.
As this is written, the review is proceeding and, as a new process, its dynamics are to some extent unpredictable. What is known is that the joint review leads to a decision that must be made by each of the USMCA member governments:
- Whether to renew the USMCA for 16 more years (with another joint review after six years);
- Whether to withdraw from the USMCA (following a minimum of six months’ notice to the other members); or
- Whether to continue the USMCA without renewing it (in which case the agreement remains in force for 10 more years and expires in 2036).
Each country must make its decision, but if one country chooses Option 2 or 3, this will affect the others. If one country chooses Option 3, continuation without renewal, then joint reviews like the current one will be conducted every year until all three agree to renew the agreement or it expires in 2036.
Following a Federal Register notice seeking input prior to the review, and stakeholder consultations and public hearings organized by the Office of the United States Trade Representative (USTR), U.S. Trade Representative Jamieson Greer briefed the members of the House Ways and Means Committee on December 16 and the members of the Senate Finance Committee on December 17 and posted his prepared testimony online.
Ambassador Greer told both committees that he was not prepared to recommend renewal of the USMCA to the president without changes. This signals that, for now, the United States is leaning in the direction of Option 3, unless they obtain concessions during the joint review negotiations.
The prospect of nonrenewal of the USMCA makes the collection of analyses and viewpoints included in this edition of USMCA Forward pertinent for policymakers, the private sector, and concerned citizens in all three countries. For the continuation of the USMCA beyond 2036 depends largely on the United States—and possibly Canada and Mexico—being persuaded that, with certain changes, the agreement is worthy of renewal.
The contributors to USMCA Forward 2026 provide 10 chapters offering expert analysis of what is working and where improvements are needed for the USMCA to achieve its potential. And, as in past editions, there are 11 viewpoints and essays written by government officials, private sector leaders, and civil society experts on the front lines of USMCA implementation that offer insights into how the agreement can be changed to win and sustain political support in Canada, Mexico, and the United States.
The chapter-length contributions begin with an assessment of the impact of the USMCA on trade and investment flows, the clearest performance indicators for any trade agreement. The co-authors of this chapter find growth in trade and investment and, in the past year, an increasing share of total trade that meets the USMCA rules of origin qualifying for tariff-free market access.
This good news is tempered by two chapters that address strains in U.S. relations with Mexico and Canada, respectively. In both cases, the threat of U.S. tariffs that drove businesses to shift toward greater USMCA compliance undermined the trust and confidence of stakeholders in Mexico and Canada in their relations with the United States. Our contributors see potential for the United States to improve its relationships with its two largest export markets, but they also offer candor about the damage done.
The remaining chapters delve into important sectors for USMCA trade and some key mechanisms of the agreement. Chapters on the automotive industry, steel, agriculture, and pharmaceuticals reveal the inner workings of the USMCA rules as well as the context of the various U.S. tariffs introduced under: Section 232 of the 1962 Trade Expansion Act; Sections 122, 201, 301, and 338 of the 1974 Trade Act; and the International Economic Emergency Powers Act (IEEPA) of 1977 (prior to the U.S. Supreme Court ruling against the use of IEEPA for the issuance of tariffs). These chapters show sectors that are struggling to adapt to changing trade rules and persistent uncertainty.
Three additional chapters examine evidence on the performance of one of the USMCA’s innovations, the Rapid Response Labor Mechanism in Mexico; the record of compliance with dispute settlement processes; and how labor is faring in each country—a critical concern of the Trump administration with regard to skilled labor in manufacturing. These chapters offer nuance and suggestions for improving how these USMCA provisions could evolve.
The 11 viewpoints include contributions from senior trade officials from Canada and Mexico. Ambassador Greer’s congressional testimony provides an indication of the U.S. perspective that can usefully be compared with the Canadian and Mexican essays.
The remaining viewpoints come from leading trade associations and business groups, including the American Federation of Labor and Congress of Industrial Organizations. The consistent thread of optimism running through each contribution is striking. It is not optimism for the USMCA alone, but for the North American economy as a dynamic, competitive, and innovative regional production platform that draws synergies and fosters specialization through linkages connecting the U.S., Mexican, and Canadian markets.
For us, this optimism is a reason for hope that the ongoing USMCA review will lead to strengthened trade rules and sustained support for North American trade, investment, innovation, and competitiveness. The review process provides the opportunity for a serious assessment of the USMCA by all three countries. This edition of USMCA Forward is a timely contribution to the review process.
