Senior Consultant, PIT Policy Lab
Senior Economist, PIT Policy Lab
Alejandra Glía Sánchez García, Edgar Aparicio González, Cristina Martínez Pinto, and Tony Payan, “Artificial Intelligence and the Future of North American Manufacturing,” Rice University’s Baker Institute for Public Policy, July 21, 2026, https://doi.org/10.25613/6khr-g912.
The United States–Mexico–Canada Agreement (USMCA) entered into force on July 1, 2020, following months of intensive renegotiations of the North American Free Trade Agreement (NAFTA) (August 2017–September 2018) and its subsequent ratification by all three countries. This working paper refers to the NAFTA era (1994–2020) as “North America Bet 1.0” to characterize the first major experiment in regional economic integration. Unlike its initial phase, which operated for over two decades without a renewal mechanism, the USMCA introduced a largely unprecedented review and term extension provision (“sunset clause”) — the first of its kind in any U.S. free trade agreement — requiring a mandatory joint review every six years, with the first scheduled for July 2026.
Since replacing NAFTA, the USMCA has sustained a robust trilateral trade ecosystem, accounting in 2024 for 13.5% of global exports ($3.09 trillion) and 18.4% of global imports ($4.22 trillion). Meanwhile, intra-regional trade reached approximately $1.93 trillion in goods and services, representing 48.2% of total USMCA commerce and underscoring the density of cross-border production linkages. The United States anchors the system as both the leading exporter ($1.9 trillion) and importer ($3.12 trillion). At the same time, continued reliance on extra-regional partners — most notably China as the leading external source of imports ($620 billion) — highlights the strategic importance of the 2026 review for supply chain resilience, industrial upgrading, and North America’s geopolitical positioning, despite recent restrictive trade initiatives by the second Trump administration (2025–29).
The USMCA review thus arrives at a defining moment for North American economic integration. It coincides with a period of heightened geopolitical complexity, alongside a rapid wave of artificial intelligence (AI) deployment and a process automation that is reshaping industries, particularly manufacturing, with significant implications for regional trade, investment, and employment in all three countries.
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