U.S.-Mexico-Canada Agreement (USMCA)
CalChamber Submits Comments on Review of US-Mexico-Canada Agreement USMCA Full Text of the Agreement United States-Mexico-Canada Agreement Website Key Milestones |
| USMCA Forward 2025 -Research Brookings, March 5, 2025USMCA Tracker Data Tool from the Brookings Institute |
Background
President Donald J. Trump announced his intent to renegotiate the NAFTA in May 2017. The negotiations started shortly thereafter, going through many rounds. In August 2018, the United States and Mexico reached a preliminary agreement, while the U.S. continued separate negotiations with Canada. In October, Canada and the United States came to an agreement right before a self-imposed deadline, reassuring the deal would remain trilateral. The pact was rebranded the United States-Mexico-Canada Agreement (USMCA). All three countries have begun to organize for the 6-year USMCA review in July of 2026.
The USMCA is a necessary modernization to NAFTA that recognizes the impacts of technology on the three countries’ economies. There are chapters on good regulatory practices, digital trade, small and medium-sized enterprises (SMEs), the environment, and labor. In total there are 34 chapters: 10 new chapters and 24 modernized chapters.
USMCA Statistics
The United States, Canada and Mexico comprise more than 520 million people (6.3% of the world’s population), more than $ 33 trillion in gross domestic product (GDP) (nearly 30% of world GDP), and $1.8 trillion in goods and services trade (5.5% of $33 trillion in total global trade). More than 13 million American jobs are dependent on trade with Mexico and Canada. The USMCA provides duty free access for nearly all goods traded among the three countries.
The importance of total U.S. – USMCA goods trade at $1.601 trillion cannot be overstated – with a total of $683.94 billion in exports to Mexico and Canada including transportation equipment ($116.69 billion), computer and electronic products ($80.47 billion), chemicals ($69.03 billion), non-electrical machinery ($63.99 billion), and petroleum & coal products ($49.06 billion).
Total U.S. imports from Mexico and Canada of $917.41 billion include transportation equipment ($238.95 billion), oil & gas ($117.91billion), computer & electronic products ($104.75 billion), electrical equipment, appliances and components ($54.13 billion), and non-electrical machinery ($52.51 billion).
Benefits and Goals
CalChamber support for the USMCA is based on an assessment that it serves the employment, trading and environmental interests of California, the United States, Mexican and Canada, and is beneficial to the business community and society as a whole.
The objectives of the USMCA are to eliminate barriers to trade, promote conditions of fair competition, increase investment opportunities, provide adequate protection of intellectual property rights, establish effective procedures for implementing and applying the agreements and resolving disputes, and to further trilateral, regional and multilateral cooperation.
CalChamber Support
The CalChamber actively supported the creation of the USMCA, the successor to the North American Free Trade Agreement (NAFTA).
Due to California’s position as a global leader in international trade, the priorities of the USMCA are important to the CalChamber’s members and the overall economic health of the state.
Major Provisions
6-Year Review
Halfway to the six-year review: One novel feature of the USMCA is that it expires after 16 years, unless Canada, Mexico and the United States agree to extend it for 16 more.
But that process actually begins in Year Six of the pact, or 2026, when each country can either confirm its desire to extend the agreement or raise concerns that it wants addressed. In the latter scenario, the three countries will continue the review every year until either the concerns are resolved, or the pact is terminated in Year 16.
Certificate of Origin
One of the major changes as a result of this trade agreement is elimination of the NAFTA Certificate of Origin. Instead, the USMCA will replace the Certificate of Origin with a certification. This is similar to other free trade agreements, such as the Korean and Australian, which also use a certification. The certification will not be required for noncommercial shipments and imports valued at less than $2,500.
Customs De Minimis
The de minimis threshold sets the value of goods below which no duties or taxes are collected by customs. According to the U.S. Department of Commerce, to help make trade easier, faster, and cheaper, the following de minimis levels shipment values will be followed. Shipments up to these de minimis values will generally enter with minimal formal entry procedures.
• Canada will raise its de minimis level for North American express shipments from C$20 to C$40 for taxes. It will also provide for duty-free treatment for express shipments up to C$150.
• Mexico will continue to provide US$50 tax-free de minimis and also provide duty-free treatment for express shipments up to the equivalent level of US$117.
• The United States will maintain its de minimis level at US$800.
Auto Regulations
The three North American trading partners have wrapped up talks on uniform regulations to implement the USMCA’s rule of origin, including on autos and clears one of the most challenging issues for USMCA implementation. Officials in the United States, Mexico and Canada have been working since March to craft the regulations, which include specific formulas and information on how automakers must comply with the new rules to qualify for reduced tariffs under USMCA.
Automakers indicate that complying with the rules will require time-consuming and costly changes, made more difficult by the economic fallout from the pandemic—but the regulations offers auto companies a transition period between July 1 and the end of the year.
Labor Issues
Appointments are being made to the newly created independent Mexico labor expert board, which will monitor and evaluate whether Mexico is implementing its promised labor reforms in a timely manner.
Mexico Statistics
In the last 20 years, two-way trade in goods between Mexico and the United States increased dramatically from $81.4 billion in 1993 to $839.56 billion in 2024, up from $796.55 billion in 2023. Today, Mexico stands as the United States’ largest trading partner. Since 1995, Mexico has been a top trading partner for the U.S.
United States’ exports to Mexico totaled $334.03.91 billion in 2024. Mexico is the first or second largest trading partner for more than half of U.S. states. Top export categories from the U.S. to Mexico included computer and electronic products, transportation equipment, petroleum and coal products, chemicals, and non-electrical machinery. There are over 50,000 small and medium sized enterprises in the U.S. that export to Mexico.
Mexico continues to be California’s No. 1 export market, purchasing 18.1 percent of all California exports. California exports to Mexico amounted to $33.47 billion in 2024. Computers and electronic products remained California’s largest exports, accounting for $6.63 billion of all California exports to Mexico. Exports of transportation equipment, non-electrical machinery, electrical equipment appliances and components, and processed foods from California to Mexico made up $3.90 billion, $3.19 billion, $2.51 billion, and $2.44 billion respectively. California was the second largest exporting state to Mexico in 2024.
Also in 2024, California imported $64.27 billion in goods from Mexico. The top import categories were transportation equipment, computer and electronic products, agricultural products, electrical equipment, and miscellaneous manufactured goods. California was the third largest importing state for goods from Mexico in 2024.
Mexico FDI Statistics
U.S. foreign direct investment (FDI) into Mexico totaled $159.22 billion in 2024 and Mexican FDI into the US totaled $61.68 billion in the same year. Mexican FDI into the U.S. supported 97,700 jobs and contributed a value of $2.1 billion to expanding U.S. exports. The top industry sectors for Mexican FDI in the U.S. were: food and beverages, auto components, plastics, financial services, business services, and software & IT services. Select USA
Mexico climbed four spots to become the No. 11 destination in the world for FDI in 2024, according to the United Nations Conference on Trade and Development. Foreign investment to Mexico reached roughly $37 billion. (June 2025 World Investment Report)
In California, the thirteenth largest source of FDI through foreign-owned enterprises (FOEs) is Mexico. In 2024, Mexican FOEs in California provided 13,872 jobs through 549 firms amounting to $1.58 billion in wages. The top jobs by sector are wholesale trade, manufacturing, professional/business services, retail trade, and transportation, wholesale and utilities (World Trade Center Los Angeles FDI Report).
Canada Statistics
The United States and Canada enjoy the largest bilateral trade and investment relationship in the world. In 2024, two-way trade in goods between Canada and the United States topped $761.80 billion. Exports to Canada were $349.91 billion in 2024, making it one of the largest export destinations for the U.S.
Canada has remained California’s second largest export market since 2006, with a total value of over $19.49 billion in 2024 (10.6 percent of all California exports). California imports $16.26 billion from Canada.
Computers and electronic products remained California’s largest exports, accounting for $4.71 billion.
Canada FDI Statistics
According to the most recent figures, the U.S. investment position $459.6 billion into Canada and foreign direct investment from Canada into the U.S. was nearly $732.9 billion in 2024 (Bureau of Economic Analysis). This makes Canada the second largest source of FDI in the U.S. FDI from Canada directly supported 887,900 jobs in the U.S. Canada invested $1.7 billion in research and development and contributed a value of $16.8 billion towards expanding U.S. exports. The top US industry sectors that Canada FDI goes to are: software and IT services, business services, financial services, real estate, financial services, industrial equipment, and renewable energy (SelectUSA).
In 2024 in California, Canada returned to its spot as the fourth largest source of FDI through foreign-owned enterprises (FOEs). In 2024, Canadian FOEs provided over 91,603 jobs through 2,016 firms amounting to $9.7 billion in wages. The top jobs by sector are: professional/business services, retail trade, financial activities, manufacturing, and information, (World Trade Center Los Angeles FDI Report).
|
Mexico Chief Negotiator Provides Insight on USMCA at CalChamber Lunch President Trump Signs USMCA Trade Pact CalChamber Welcomes House of Representatives Vote to Approve USMCA CalChamber Once Again Urges Congressional Support for USMCA CalChamber Reiterates Support for U.S.-Mexico-Canada Agreement U.S., Mexico, Canada Sign New Trade Agreement |
Related News
Resources
U.S. Trade Representative – USMCA
U.S. Dept. of Commerce International Trade Administration – USMCA
Fact Sheets
Modernizing NAFTA to Be a 21st Century Trade Agreement
Strengthening North American Trade in Agriculture
Agriculture: Market Access and Dairy Outcomes of the USMC Agreement