Unpacking USMCA

In 2023, U.S. trade with Mexico grew to nearly $800 billion, leading Mexico to surpass both Canada and China as the United States’ number one trading partner. While U.S.-Mexico trade has long been a pillar of North American economic competitiveness, Washington’s efforts to move trade away from China in favor of nearshoring and friendshoring in the Western Hemisphere, coupled with the advantages of a modernized trade agreement in the form of the United States-Mexico-Canada Agreement (USMCA) has underpinned this increase in bilateral trade and investment. At the same time, Chinese investment in Mexico has skyrocketed, with estimates finding that in 2022 Chinese foreign direct investment in Mexico was more than double that of 2018.

In this episode, Christopher Hernandez-Roy sits down with Kenneth Smith Ramos, Chief Trade Negotiator for Mexico from 2017 to 2018 and one of the architects of USMCA. Together, they discuss the evolution of USMCA since its entry into force in 2020, with a focus on the recent surge of Chinese invesment in Mexico, understanding the nature of this investment, as well as the potential challenges it may present. They also discuss the upcoming 2026 Joint Review of the agreement, and what can be done by all three countries to lay the groundwork for a more constructive session.