A prominent business association has raised concerns that abandoning the United States-Mexico-Canada Agreement (USMCA) could lead to significant economic disruption. This move, championed by the previous administration, now faces scrutiny as the Business Roundtable highlights the potential for widespread job losses and fractured supply chains across North America. The organization advocates for the continuation and strengthening of the trade deal, underscoring its vital role in fostering regional economic integration and stability, particularly in key states such as Texas and California.
Economic Implications of USMCA Disruption
The Business Roundtable's recent analysis underscores the severe economic ramifications of a potential U.S. withdrawal from the USMCA. The report details how deeply integrated North American supply chains have become, with goods frequently crossing borders for production and assembly. Disrupting this established framework, warns the CEO-led group, could not only lead to significant inefficiencies but also put an estimated 1.2 million jobs in Texas and 1.7 million jobs in California at risk. These figures highlight the widespread dependence of various U.S. sectors on consistent and predictable trade relations with Canada and Mexico. The organization's vice president for trade and international relations, Nasim Fussell, emphasized during a testimony that maintaining the USMCA is crucial for U.S. business vitality, advocating for stronger regional integration and economic security.
Texas and California serve as prime examples of states heavily reliant on USMCA trade, demonstrating robust growth in both goods and services exports to Canada and Mexico since 2015. Texas alone exported $168 billion in goods and services in 2024, with its goods exports increasing by 35% and services exports by 38% since 2015. Similarly, California's services exports have surged by 53% over the same period, illustrating the multifaceted nature of cross-border commerce beyond traditional manufacturing. Approximately two-thirds of Texas's imports and half of California's imports from these partners are intermediate inputs, signifying their integral role in U.S. production processes. Fussell further noted that North American trade has expanded by 50% since the USMCA's inception, with Canada and Mexico investing $775 billion in the U.S., proving the efficacy of integrated production networks over disparate bilateral agreements.
Political Uncertainty and Trade Policy
Despite strong support from major U.S. employers and manufacturers, the USMCA faces political uncertainty, particularly from former President Donald Trump, who has publicly questioned its necessity. Trump's comments, suggesting the agreement is 'irrelevant' and disproportionately benefits Canada, have reignited concerns among businesses dependent on cross-border trade. These remarks have caused apprehension for industries like automotive manufacturing, which relies heavily on the integrated supply chains facilitated by the USMCA. The upcoming joint review of the agreement later this year is a critical juncture that will determine the future stability and direction of North American trade relations, with businesses advocating for its renewal to prevent potential economic downturns.
Trump's statements earlier this year, including his assertion that the U.S. does not need vehicles manufactured in Canada or Mexico, signal a potential shift towards protectionist trade policies. This stance directly contradicts the Business Roundtable's findings, which highlight the substantial U.S. value embedded in imports from North America—approximately 15% of the value in U.S. manufacturing imports from the region reflects U.S. labor and resources returning home, a stark contrast to the less than 2% for imports from China. This 'regionalization' not only boosts domestic employment but also strengthens supply chain resilience by reducing reliance on distant markets. The ongoing debate between trade liberalization and protectionism will heavily influence the outcomes of the USMCA's joint review and shape the future economic landscape of North America.
