Undoing North America’s Integrated Economies and its Grave Consequences. Diya Kumar (26) and Shea Carlberg (25), George Washington University

North America’s triad has always relied on each other for shared prosperity. The US-Mexico-Canada Agreement (USMCA), inaugurated in 2020, was built for mutual growth and stability. But now, President Donald Trump’s tariff approach on goods from nations neighboring the US has inflicted damage on Canada and Mexico. By the same coin, it has opened the door for China to become a dominant trade partner—especially with Mexico. 

The upcoming 2026 review is no routine check-up. It’s shaping into a renegotiation that will determine the future of North American cooperation. 

The U.S.’ greatest strength has always been its alliances,” said Jean Charest, former premier of Quebec. 

Three experts, one from each member country, met at the Brookings Institution to discuss the high stakes of the formal review, scheduled for June or July 2026. This economic partnership underpins one-third of global GDP and supports around 17 million jobs. The implications of the renegotiation reach far past North America itself. 

The Cost of Tariffs and the Illusion of Self-Sufficiency 

Jean Charest emphasized that we no longer live in a world where complex goods are produced by a single country. Staying competitive now depends on how effectively nations diversify and secure their critical materials. 

President Trump’s tariff strategy, rooted in a vision of self-sufficiency, carries heavy consequences. Nearly half of U.S. imports are parts for final products, yet one-third of imported goods now face tariffs. 

Severe Section 232 national security tariffs, namely the 50% duties on aluminum and iron, have significantly escalated the cost of producing goods within the U.S. These materials are the backbone of industries like automotive manufacturing and construction, meaning higher tariffs ripple through every stage of production. 

Because the U.S., Canada, and Mexico share tightly linked supply chains, these policies disrupt a deeply integrated system. Unraveling that economic interdependence would not only raise prices for consumers but also threaten jobs and competitiveness across all three economies. The U.S. could thrive and diversify critical materials, but the government has to want it to work between our neighbors—and the convening leaders said this means getting rid of 232 tariffs.

Ironically, building a car in the U.S. with North American parts can now cost more than importing a finished vehicle from Germany or South Korea. 

There’s also a historical irony. Trump’s first-term tariffs on China unintentionally boosted Mexico’s manufacturing sector as goods manufactured in Mexico could trade with the U.S. tariff-free, even when all the parts came from China. As Charest summed it up, “[the USMCA renegotiation], in a few words, is all about China.” 

Mexico: The Backdoor Challenge and Investment Shift 

Trump’s tariffs have allowed China to cement itself as a major trade partner with Mexico. The effects are visible on every road. One in three cars sold in Mexico today is Chinese as they are often 30% cheaper than comparable U.S. or European models, according to Jorge Esteve Recolons, General Director of ECOM Agroindustrial in Mexico. 

Recolons noted the concern about China using Mexico as a “backdoor” into U.S. markets “has some truth to it.” Roughly 30 to 40% of the companies waiting for space in Mexican industrial parks are Chinese. Indeed, they are watching U.S.-Mexico trade policies very closely.

Canada’s Double Loss 

Meanwhile, Canada has faced its own set of painful lessons. The country followed the U.S. in imposing 100% tariffs on imported Chinese electric vehicles, even though there were few being sold in Canada. China struck back by targeting major Canadian exports like canola and pork. Simultaneously, the Trump administration hit Canada with 50% tariffs on essential goods, creating consecutive losses. 

The experience is one that has forced Canada to rethink how closely it should align itself with U.S. trade policies in the future. 

A Test of Trust and Strategy 

The core lesson remains: the U.S.’ greatest strength lies in its alliances. Yet superpowers often act in ways that cause collateral damage to their friends. The real challenge ahead is not just the competition with China, it is whether the U.S. will choose to strengthen trust with its allies or fracture it again for short-term gains.