USMCA Provides Certainty but Requires Improvements: USTR

Jamieson Greer,  Head, White House’s Office of the United States Trade Representative (USTR), stated that the USMCA has been a success to a certain extent but emphasized that further progress is necessary for its renewal.

In accordance with the USMCA Implementation Act, Greer presented a verbal report in private meetings to the House Ways and Means Committee and the Senate Finance Committee, evaluating the agreement’s functioning ahead of the joint review scheduled for July 1, 2026. While the report itself was not made public, the USTR issued a statement summarizing the outcomes of the consultation process.

“ USMCA has been a success to a certain extent. As reflected in the information we have received from stakeholders, there is broad support for the Agreement,” Greer said. According to the USTR, USMCA has provided some certainty for North American trade. US exports of goods and services to Canada and Mexico have risen 56% since 2020, and Mexican workers’ wages nearly doubled, from US$2.30 per hour in January 2020 to US$4.20 per hour in September 2025, “at least in part due to labor reforms required by the Agreement and the frequent use of the Rapid Response Mechanism.” 

Additionally, Mexico has captured 25% of the reduction in the US bilateral trade deficit with China, highlighting Mexico’s key role in strengthening the resilience of US supply chains. Despite these achievements, the USTR noted that many US objectives such as bolstering domestic manufacturing capacity and creating quality jobs have not yet been fully realized.

USTR Highlights Challenges in Mexico and Canada

Specific shortcomings include Mexico’s ongoing challenges enforcing labor legislation, including the lack of sanctioning authority for the Federal Center for Labor Conciliation and Registration, as well as budgetary gaps in Mexico’s Single Window electronic system for customs facilitation. The USTR also highlighted the persistently high US trade deficit in goods, which, despite North American trade being more favorable for national security than trade with other regions, reflects offshoring and structural disadvantages.

To address these issues, the USTR proposed mechanisms to penalize the relocation of US production to Mexico or Canada due to regulatory or other arbitrations. “Other deficiencies include harmful changes in Mexico’s business climate, exemplified by recent constitutional reforms to renationalize the energy sector in ways that hurt US investors, and Mexico’s refusal to compensate Vulcan Materials for the seizure of its gravel mine,” Greer told lawmakers.

The USTR also criticized Canada’s insistence on maintaining its Online Transmission Act, which “discriminates” against US technology and media companies, alongside measures restricting digital services trade and unjustly limiting US dairy market access. “Finally, USMCA was not truly designed to address the sudden surge in investment by firms from non-market economies in the region or the effects of excess industrial capacity across the three economies,” Greer added.

“Therefore, I do not believe we can say USMCA is a resounding success. Fortunately, steps have already been taken to address some of these deficiencies, including Section 232 actions on automobiles to create stronger incentives for domestic production,” he noted. Looking ahead, Greer stressed that the question is whether, acknowledging these shortcomings, steps should be taken to correct them.

USMCA Negotiation

The 2026 USMCA review will serve as a test of the region’s ability to coordinate policy and maintain economic cohesion. Under Art. 34.7 of the agreement, the three countries must decide in July 2026 whether to extend the agreement to 2042, keep it subject to annual reviews, or allow it to expire in 2036.

Adrián González, President, Global Alliance Solutions, anticipates that Washington may adopt a high-pressure approach similar to former President Trump’s strategy, presenting a full list of demands alongside the threat of walking away. He suggested that a formal withdrawal notice could be used strategically to increase leverage before ultimately negotiating a resolution. “At the end of the day, we are going to keep USMCA,” he said, adding that Mexico is likely willing to make concessions on issues such as China, regional security, and supply-chain integration.