Reshoring, Nearshoring, and North American Supply Chains

Introduction

Since the United States-Mexico-Canada Agreement (USMCA) went into effect in 2020, the global economy has been responding to three new and interconnected realities.^[1] First, the international community experienced a series of shocks — the U.S.-China trade war, COVID-19 global pandemic, and the Russia-Ukraine war — that revealed both the importance and the fragility of international supply chains.^[2] Second, the ongoing strategic competition between the U.S. and China over trade and political influence has led to many considering economic security to be synonymous with national security.^[3] Third, the global trading order appears to be fragmenting and heading towards regional trade blocs.^[4] All of these realities relate to the review and renegotiation of the USMCA and will undoubtedly affect its outcome. Consequently, it is important to analyze each reality against what the USMCA was designed to accomplish, what it now achieves, and what it can do — with judicious additions — going forward.

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Notes

^[1] U.S.-Mexico Foundation, The North American Project at 4, (noting that the “COVID-19 pandemic exposed the fragility of supply chains, Russia’s invasion of Ukraine destabilized energy and security balances, and — most significantly — escalating tensions between China and the United States have accelerated the fragmentation of global trade.”), 
https://mexicocomovamos.mx/wp-content/uploads/2025/10/TNAP2025_ENG.pdf [hereinafter The North American Project].

^[2] Supply chains or global value chains (GVC) are a crucial part of the world trade and are studied on a regular basis by the World Trade Organization and other organizations in a series of Global Value Chain Development reports. According to the 2023 report “Recent shocks [to GVCs] have led to an increased awareness of mutual interdependence among countries and highlighted the susceptibility of trade flows to trade barriers. Changes in a country’s trade policy or exogenous shocks, such as COVID-19, reverberate down the supply chain leading to disruptions.” at p.  49, https://bit.ly/4qJTHk9 [hereinafter Global Value Chain Development Report 2023].

^[3] Daniel W. Drezner, “How Everything Became National Security,” Foreign Affairs, August 12, 2024, https://www.foreignaffairs.com/united-states/how-everything-became-national-security-drezner; Justin Muzinich, Gina Raimondo, James Taiclet, Jonathan Hillman, and Anya Schmemann, U.S. Economic Security: Winning the Race for Tomorrow’s Technologies, at 2, Council for Foreign Relations (CFR) (2025), https://www.cfr.org/task-force-report/us-economic-security (noting that the global shocks have “pushed economic power further to the front lines of national security policy” and that “[i]ncreasingly, economics and national security have converged, if not collided.”) [hereinafter CFR — U.S. Economic Security].

^[4] Marijn Bolhuis, Jiaquin Chen, Benjamin Kett, The Costs of Geoeconomic Fragmentation (IMF) (June 2023) (suggesting that what was occurring was geoeconomic fragmentation — defined as a policy-driven reversal of economic integration, of which international trade is a central component.”)

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