Reforming North American Trade

Rather than worrying about whether the USMCA will last past 2036, America’s businesses need to focus on whether they will. 

John F. Di Leo | June 13, 2026

President Trump mentioned that he “may not renew” the United States-Mexico-Canada Agreement (USMCA), the replacement of the North American Free Trade Agreement (NAFTA) that he signed during his first term. 

This remark naturally concerned people who have built their businesses on NAFTA commerce, but there are so many misunderstandings about the NAFTA/USMCA program that evaluating both its current status and its future requires some background.

NAFTA dates to the late 1980s and early 1990s, when we still believed in the dream of free trade -- the idea that if we lowered our trade barriers, our trading partners would too (Newsflash: They didn’t). 

At that time, we were watching “developing nations” on the Pacific Rim take over manufacturing from western nations at a surprising pace. Western nations were looking for a way to keep manufacturing at home, so the idea of the Free Trade Agreement (FTA) -- a treaty that rewards predominantly domestic manufacture and sourcing with reciprocal duty-free treatment -- was born to serve this goal. 

Picture a typical manufactured good -- a sump pump, washing machine, or automobile. Such products have dozens or hundreds of parts. Final assembly employs people, sure, but even more than that, the original manufacture of all those components employs many more.

NAFTA, like all successor treaties of its class, set up complex Rules of Origin, with different, specific tests for every classification, requiring the manufacturer to study the Bill of Material (BoM) of each product to see if a sufficient percentage was made in the member territory.

Make a product in the USA, Canada, or Mexico -- and make sure that enough of its components were also made in the USA,........

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