The USMCA in Retrospect: -Part 1- Analysis of Five Years of Trade and Expectations for 2026

In October 2025, Mexico achieved historical figures in its trade relationship with the United States, with exports exceeding $48.524 billion and a record surplus of $18.949 billion. These numbers solidify the country’s position as the primary trading partner of the United States, representing 15.5% of total bilateral flows. However, these accomplishments occur at a critical juncture, just days before the start of negotiations for the joint review of the USMCA, which will determine its potential 16-year extension.

The Agreement between Mexico, the United States, and Canada is the most crucial free trade agreement for Mexico, involving the largest volume of goods and the greatest economic weight among the signatory countries. The review scheduled for July 2026, established in clause 34.7 of the treaty, initially focuses on data analysis and the potential integration of new goods related to the digitalization of trade. However, the global geopolitical context and U.S. stances have introduced the possibility that this review could evolve into a deeper renegotiation.

The upcoming USMCA review is not merely an administrative procedure. It represents a crossroads that could reconfigure the economic landscape for key sectors such as manufacturing, technology, and energy, keeping important industrial hubs in the country, such as El Bajío, Nuevo León, and Jalisco, in suspense.

The USMCA and its Importance in North American Economic Integration

The USMCA came into effect on July 1, 2020, replacing the 1994 North American Free Trade Agreement (NAFTA) and modernizing the trade relationship among the three countries. This treaty represents a globally unique trade instrument due to its exchange volume, the significance of its trading partners, and its periodic review clause. Its implementation involves millions of jobs across North America, fostering well-being and stability.

Mexico’s economic growth has been intrinsically linked to its trade openness over the past four decades. The USMCA has facilitated unprecedented access to the U.S. market for Mexico, solidifying the country as a major supplier. The productivity of Mexican manufacturing workers has seen a remarkable increase of 69.6% since the treaty’s signing.

Trade integration has been a driver of development for Mexico, enabling sustained growth over the past 40 years. 84% of Mexican non-oil exports are directed to the United States, solidifying the country’s position as the primary trading partner of the U.S. and the second-largest for Canada. Trade exchange among Mexico, the United States, and Canada exceeded $1.6 trillion annually in 2023, reflecting the magnitude of regional integration.

The USMCA sought to promote stable access for Mexican exports to the United States, attract foreign investment to create jobs, support the country’s macroeconomic stability, and achieve macroeconomic convergence with its trading partners. It has contributed to sustained economic growth in North America, making it the largest free trade area in the world.

Economic Growth and Sectoral Performance Under the USMCA

Between 2019 and 2024, Mexico and Canada increased their exports to the United States by 38% and 29%, respectively, demonstrating the growing importance of intra-regional trade. Mexico’s exports to its regional partners showed an upward trend between 2019 and 2024, despite interruptions caused by the COVID-19 pandemic.

Trade in goods among USMCA members tripled since its inception, surpassing one trillion dollars in 2015, more than triple the nominal value prior to the 1993 treaty. The manufacturing sector has played a prominent role in Mexico’s total trade exchange, with categories such as reactors, boilers, machinery, electrical apparatus, vehicles, and railway material representing over 64% of total exports to the United States.

Several strategic sectors have shown considerable growth. The automotive sector, a pillar of Mexican exports, experienced a 35% increase, rising from $124 billion to $167 billion between 2019 and 2024. Exports of electronic products also significantly increased by 48% during the same period. The pharmaceutical industry showed the fastest growth at 88%, while the chemical sector recorded a 52% increase.

Collectively, these six strategic sectors (automotive, electronics, aerospace, pharmaceutical, chemical, and semiconductors) accounted for 45% of Mexico’s total exports to the United States in 2024, totaling approximately $274.6 billion. The automotive sector is particularly crucial, representing nearly 70% of Mexico’s total manufacturing exports and showing a positive correlation with total exports.

Foreign Direct Investment and Supply Chains

44% of Foreign Direct Investment (FDI) in Mexico originates from the United States, and 8% from Canada, evidencing the strong economic dependence within the region. Direct investment from Canada and the United States in Mexico, between 1999 and September 2016, totaled over $236 billion.

Economic analysis indicates that the USMCA’s impact has been particularly notable on Mexico’s gross domestic product (GDP), with estimated annual benefits of $170 billion, in addition to $127 billion for the United States and $50 billion for Canada. Mexico has strengthened its dynamism as an exporting country, significantly attracting foreign direct investments that have reoriented the national economy.

The U.S.-origin content in manufactured products from Mexico is considerable, reaching an average of 40%, while for Canada, this figure stands at 25%. This high U.S. content in Mexican exports demonstrates the deep integration of the economies and complementarity within the USMCA framework.

Regional Impact: North, Central, and South

The treaty has driven the transformation of vast regions in northern and central Mexico (El Bajío), industrializing them and opening their economies to trade. However, the southern part of the country has lagged, creating a regional divide and a process of regional divergence instead of convergence.

Key manufacturing regions in Mexico, such as El Bajío, Jalisco, and Nuevo León, currently face uncertainty due to the USMCA review. Investments in these areas, heavily dependent on the manufacturing and automotive industries, are on hold pending the treaty’s resolution. The automotive industry, in particular, is a focus of negotiation due to tariffs and rules of origin.

The integration of Mexico’s south-southeast with North American supply chains still presents challenges, as does the necessary investment in logistical infrastructure, technology, and ensuring security on highways, which are fundamental routes for exports. Efficiency in transit processes, communication, and security are crucial for maintaining competitiveness.

Approximately 14.6 million people in Mexico, nearly a quarter of the employed population, are linked to sectors associated with trade integration, such as manufacturing, wholesale trade, and transportation and warehousing. This figure underscores how the Mexican workforce benefits from and contributes to the economic dynamics of the region 45 46.

Trade Surplus and Bilateral Dynamics

Mexico has achieved a significant milestone in its trade relationship with the United States, reaching a record trade surplus of $196.913 billion in 2025, a 14.8% year-over-year increase. This figure positions the country on a path to potentially surpass China as the leading partner with a positive trade balance against the United States. The gap between Mexico’s and China’s surpluses narrowed to a marginal $5.158 billion.

(Surplus: A financial situation where revenues exceed expenditures over a given period, indicating economic health, abundance, or excess.)

In October 2025, exports of Mexican products to the United States grew by 6.7% year-over-year, reaching $48.524 billion. This increase firmly positions Mexico as the United States’ primary trading partner, representing 15.5% of total bilateral flows. Imports from the United States experienced a 1.8% increase, standing at $29.575 billion.

A White House analysis highlights that Mexico has captured a substantial portion, 25%, of the reduction in the bilateral trade deficit that the United States maintained with China. This underscores Mexico’s resilience and importance in U.S. efforts to diversify and strengthen its supply chains.

Impact on Sectors: Population, Government, and Businesses

Trade integration, driven by the USMCA, has created advantages for Mexican families’ finances, allowing access to a greater variety of goods and services at better prices due to increased economic competition. Trade openness facilitates the acquisition of durable goods such as phones and computers, as well as access to streaming services, at more accessible costs.

Remittances, 96% of which originate from the United States, play a crucial role in sustaining Mexican households, especially those with low incomes. This dependence reflects the deep economic interconnectedness between both countries.

However, the neoliberal economic model implemented in Mexico since 1982, and continued with NAFTA and now the USMCA, is characterized by low economic growth. In comparison to the previous period (1960-1982), when the annual GDP growth rate was 6.5% and per capita GDP grew by 3.5%, the neoliberal era (1982-2020) has recorded an average GDP growth of 1.9% and per capita GDP growth of only 0.3%.

The gap between Mexico’s and the United States’ per capita GDP has widened instead of narrowing. While in 1982, Mexican per capita GDP represented 29.2% of U.S. per capita GDP, by 2020, this figure had decreased to 17.3%. This divergence became particularly pronounced after NAFTA’s implementation, indicating that trade integration did not translate into a relative improvement of the Mexican economy compared to the U.S. economy.

Despite these figures, in a scenario where the treaty is terminated, Mexico would be the most affected country due to its lower economic resilience compared to the United States and Canada. The consequences would extend throughout the entire chain: the final consumer, workers, small and medium-sized supplier companies, and the government, which would face fiscal deficits and mass unemployment. The population, government, and business owners would suffer differentiated but significant impacts, with the final consumer being one of the most affected initially, followed by the state economy and finally the government.

Comparison of Results Between Mexico, the U.S., and Canada

The USMCA integrates economies with different dynamics and magnitudes. The United States represents 85% of the market size within the USMCA, followed by Canada (9%) and Mexico (6%). This disparity in market size and per capita GDP solidifies Mexico’s role as more of a producer than a consumer within the treaty’s framework.

In 2023, Mexico’s total trade with the United States and Canada reached $840 billion. Mexico solidified its position as the United States’ primary trading partner, representing 15.7% of its total trade, and as Canada’s third-largest trading partner, with a 3.6% share 67. Mexico and Canada are the United States’ primary trading partners, with trilateral trade reaching $1.8 trillion in 2022.

The trade relationship between Mexico and the United States has shown constant growth, reaching 16% of total U.S. trade in 2024. U.S. exports to Mexico and Canada have grown by 30% and 19%, respectively, between 2019 and 2024, demonstrating the robustness of trade ties.

[In the second part of this analysis, we will examine the key points of the 2026 review, possible scenarios for the treaty’s future, and the economic implications for Mexico over the next ten years.]

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first appeared in Líder Empresarial.