North American Trade Crucial for US Manufacturing
The National Association of Manufacturers emphasizes the importance of North American trade for US manufacturing, citing the USMCA agreement and the need for cooperation with Canada and Mexico.
The US manufacturing sector relies heavily on trade with Canada and Mexico, with one-third of all US manufactured goods being exported to these two countries. This is more than the combined exports to the next nine largest US manufacturing export partners. According to Andrea Durkin, NAM Vice President of International Policy, the implementation of the USMCA agreement has led to an increase in exports to Canada and Mexico, with 15 out of 18 manufacturing sub-sectors experiencing growth.
The Importance of USMCA
The USMCA agreement has been instrumental in promoting trade between the US, Canada, and Mexico. Durkin notes that many companies operate across these borders, benefiting from the regionalized co-production of goods. In fact, half of the goods imported from Canada and nearly 70% of those imported from Mexico are traded within a single corporate parent. This symbiotic relationship helps US manufacturers compete with China and highlights the need for policymakers to balance their desire to onshore production with maintaining a strong regional partnership.
Priorities for Cooperation
Durkin has outlined several priorities for policymakers to consider when maintaining the USMCA agreement. These include strengthening implementation and coordination, building on the agreement, and addressing changes carefully. By improving coordination and making trade at the border more fluid, the three countries can reduce risks and improve the overall trade environment. Additionally, pursuing cooperation on customs facilitation, energy, AI policy, and critical minerals policy can further enhance the agreement.
Geopolitical Implications
The competition with China is driving US investment in advanced manufacturing, and policymakers must consider the geopolitical implications of their decisions. Durkin emphasizes the need to reduce overreliance on single markets and supply chain choke points, arguing that manufacturers' global footprint and diversification with US allies are a source of resilience. By working closely with manufacturers, policymakers can determine which parts of the production process are most important to retain in the US and where the region can benefit from integrated North American supply chains.
The USMCA agreement will remain in force for another decade, with annual reviews providing an opportunity for the three countries to discuss implementation issues and improve coordination. As policymakers consider changes to the agreement, they must work closely with manufacturers to ensure that any adjustments do not negatively impact the sector. By doing so, they can help US manufacturers retain competitiveness in advanced manufacturing and maintain their position in the global market.
