North American Trade at a Crossroads: USMCA Review Threatens Automotive and Footwear Industries
The 2026 review of the US-Mexico-Canada Agreement (USMCA) is generating significant concern across multiple industries, with major players warning that alterations to the current agreement could destabilize North American economies and impact consumers.At the heart of the debate lies the potential for new tariffs and the preservation of the existing tax-free trade zone.
Significant investments have been made by companies operating across the three countries, building integrated manufacturing networks over decades. These companies argue that any disruption to this established system risks collapsing the businesses they’ve painstakingly constructed. Maintaining the current USMCA terms is seen as crucial for continued competitiveness in the global market and overall economic stability.
The Automotive Industry Faces Potential Price Hikes
A primary fear centers on the automotive sector. Changes to USMCA rules that introduce taxes on vehicles crossing North American borders are predicted to substantially increase the price of new cars. This price increase could render new vehicles unaffordable for millions of families in both Mexico and the United States, potentially triggering an economic crisis within the industry, even as significant investment is flowing into the sector, notably regarding electric vehicle production.
Japan, a major investor in North American automotive manufacturing, has a considerable stake in the outcome.With over $87 billion invested in the region, Japanese automakers operate 25 plants in the United States, 12 in Mexico, and 5 in Canada, producing complete vehicles and critical components like engines, transmissions, and batteries.The current USMCA framework, with its tax-free trade provisions, allows for cost-effective operations in Mexico and Canada, supporting continued investment in the United States and keeping vehicle prices manageable.
However, the dialogue surrounding the USMCA review is marked by tension. The United Auto Workers (UAW) union in the United States has taken a strong position, alleging that Mexico is not fully complying with labor obligations outlined in the agreement and maintaining wages that are too low.
footwear Industry Defends Zero-Tariff Access
Beyond the automotive sector, MexicoS footwear industry is also closely monitoring the USMCA review. The industry’s key objective is to preserve the “zero tariff” benefit, allowing shoes to enter the United States without incurring taxes.
Juan Carlos cashat Usabiaga,representing the Guanajuato Footwear Industry Chamber (CICEG),emphasized the importance of maintaining this advantage.He stated that zero-tariff access is vital for Mexican footwear to compete effectively against large-scale manufacturers in Asia, and that Mexico has considerably benefited from this preferential access to the US market. Currently,the US imposing tariffs on goods from other countries gives Mexican footwear a competitive edge,a position the industry is determined to protect.
The 2026 USMCA review represents a critical juncture for North American economic stability.Japanese automakers are adamant that maintaining the existing treaty is essential to safeguard their substantial investments and preserve the region’s position as a key global automotive manufacturing hub. Weakening the USMCA could lead to increased consumer costs, damage the established supply chain, and introduce instability, even as efforts are underway to address other economic challenges like energy infrastructure improvements.
