{"id":1219,"date":"2026-06-13T08:37:00","date_gmt":"2026-06-13T08:37:00","guid":{"rendered":"https:\/\/interstatelogisticshubs.com\/?p=1219"},"modified":"2026-06-13T08:37:00","modified_gmt":"2026-06-13T08:37:00","slug":"reforming-north-american-trade","status":"publish","type":"post","link":"https:\/\/interstatelogisticshubs.com\/?p=1219","title":{"rendered":"Reforming North American Trade"},"content":{"rendered":"
\n

President Trump mentioned that he\u00a0\u201cmay not renew\u201d\u00a0the United States-Mexico-Canada Agreement (USMCA), the replacement of the\u00a0North American Free Trade Agreement (NAFTA) that he signed during his first term.\u00a0<\/p>

Read more New York, Delta Airlines go woke and woker<\/a><\/p>\n

This remark naturally concerned people who have built their businesses on NAFTA commerce, but there are so many misunderstandings about the NAFTA\/USMCA program that evaluating both its current status and its future requires some background.<\/p>\n

NAFTA\u00a0dates to the late 1980s and early 1990s, when we\u00a0still\u00a0believed in the dream of free trade — the idea that if we lowered our trade barriers, our trading partners would too (Newsflash: They\u00a0didn\u2019t).\u00a0<\/p>\n

At that time, we were\u00a0watching\u00a0\u201cdeveloping\u00a0nations\u201d\u00a0on the Pacific Rim take\u00a0over manufacturing from western nations at a surprising pace. Western nations were looking for a way to keep manufacturing at\u00a0home, so the\u00a0idea of the\u00a0Free Trade\u00a0Agreement\u00a0(FTA)\u00a0— a treaty that rewards\u00a0predominantly domestic manufacture and\u00a0sourcing with\u00a0reciprocal\u00a0duty-free treatment —\u00a0was born to serve this\u00a0goal.\u00a0<\/p>\n

Picture a typical manufactured good —\u00a0a\u00a0sump\u00a0pump,\u00a0washing machine, or automobile. Such\u00a0products have dozens\u00a0or\u00a0hundreds of parts. Final\u00a0assembly employs people,\u00a0sure,\u00a0but even more than that, the original manufacture of all those\u00a0componentsemploys many more.<\/p>\n

NAFTA, like all successor treaties of its class, set up\u00a0complex Rules of Origin, with different, specific tests for every classification, requiring the manufacturer to\u00a0study the\u00a0Bill of\u00a0Material\u00a0(BoM)\u00a0of each product to see if a\u00a0sufficient\u00a0percentage was made in the member territory.<\/p>\n

Make a product in the USA, Canada,\u00a0or Mexico\u00a0— and\u00a0make\u00a0sure that enough of its components were also\u00a0<\/em>made in the USA, Canada, or Mexico\u00a0—\u00a0and the finished product will\u00a0get duty-free treatment when shipped between these three nations.<\/p>\n

There\u00a0is\u00a0no penalty if\u00a0not; you could still manufacture and ship products that don\u2019t qualify,\u00a0you just\u00a0can\u2019t\u00a0claim\u00a0the duty-free treatment.<\/p>\n

Hopefully,\u00a0the savings of five or ten percent in duties would make it worthwhile for such companies\u00a0to do more local (in-region) sourcing.<\/p>\n

Over the past 30-plus years, an enormous amount of cross-border trade has developed across North America, certainly keeping some assembly here that might otherwise have moved to Asia\u00a0— but gradually, more and more\u00a0of the\u00a0parts got outsourced to Asia, so, in truth,\u00a0many allegedly\u00a0NAFTA-qualifying\u00a0products no longer meet the purpose that NAFTA\u00a0intended.\u00a0<\/p>\n

By the early 2000s, it became clear\u00a0that many\u00a0North American manufacturers didn\u2019t\u00a0understand\u00a0the above goals or programs,\u00a0didn\u2019t\u00a0know there were\u00a0specific rules of origin,\u00a0and\u00a0didn\u2019t\u00a0train their staff\u00a0to follow them.<\/p>\n

Companies\u00a0were issuing\u00a0FTA\u00a0certificates\u00a0on their own products without performing the NAFTA tests\u00a0to see if\u00a0they\u00a0qualified. Many even carelessly issued certs automatically,\u00a0on everything they shipped, no matter where the products were made.\u00a0<\/p>\n

Taken one by one, such issues\u00a0obviously constitute\u00a0fraud and tax evasion, and\u00a0have resulted in numerous penalties over the years,\u00a0sometimes\u00a0in\u00a0the hundreds\u00a0of millions of dollars each.<\/p>\n

But taken as a group, such issues\u00a0prove\u00a0a general failure of the program. The USA, Canada, and Mexico continued to bleed manufacturing, while China continued to gain market share.<\/p>\n

Something had to be\u00a0done.\u00a0<\/p>\n

\n

\"\"<\/figure>\nSo,\u00a0during the first Trump term, NAFTA\u00a0was renegotiated and\u00a0renamed the USMCA.<\/p>\n

They tightened some rules\u00a0a\u00a0bit\u00a0and\u00a0improved our neighbors\u2019 legal protections for workers\u2019 rights and intellectual property, but in the end, they\u00a0didn\u2019t\u00a0make many changes, and it\u00a0didn\u2019t\u00a0solve the ongoing problem: this FTA simply wasn\u2019t keeping manufacturing in North America.<\/p>

Read more Why the June 20 Paris rally for Iranians is drawing unprecedented international support<\/a><\/p>\n

Due to a lack of\u00a0awareness,\u00a0training,\u00a0and\u00a0enforcement,\u00a0it has failed.\u00a0<\/p>\n

The goal of keeping manufacturing here is obviously still the correct\u00a0goal, but whether FTAs are the way to get there is in question.<\/p>\n

The USMCA\u00a0has a\u00a0sunset\u00a0provision,\u00a0and it requires periodic review\u00a0and intentional renewal. Negotiators are currently working on the\u00a02026\u00a0review.<\/p>\n

While\u00a0it\u2019s\u00a0conceivable that it could be\u00a0terminated\u00a0with six months\u2019 notice, the odds are against that.\u00a0It\u2019s\u00a0more\u00a0likely that it would simply be scheduled for termination when its statutory time runs out\u00a0in 2036.\u00a0<\/p>\n

Negotiators may\u00a0come up\u00a0with\u00a0some tweaks to the program\u00a0this year and\u00a0maybe annually, each time\u00a0requiring higher domestic content percentages or similar improvements, making compliance more\u00a0complicated\u00a0with every revision.\u00a0<\/p>\n

But eventually, a political reality needs to set in.<\/p>\n

The problem\u00a0really\u00a0isn\u2019t with the agreement itself; it\u2019s with the fact that the manufacturers of the United States, Mexico, and Canada either aren\u2019t patriotic enough to try to source\u00a0locally, or\u00a0aren\u2019t educated enough to realize that local sourcing is\u00a0required, or aren\u2019t honest enough to obey the law and follow the USMCA\u2019s requirements.\u00a0Or\u00a0all of\u00a0the above.\u00a0<\/p>\n

A strong case\u00a0can be made that ignorance of the law\u00a0remains\u00a0the main problem, that too many manufacturers simply\u00a0aren\u2019t\u00a0aware of the purpose and methodology of FTAs. They think of\u00a0FTAs\u00a0as tax-cut plans, not as encouragements to inspire and reward\u00a0local manufacturing and local sourcing.<\/p>\n

The government should have focused on education\u00a0all along. We are cutting business taxes and federal regulations; we are encouraging the development of new domestic production.\u00a0USMCA users need to understand how these\u00a0seemingly separate\u00a0issues\u00a0are supposed to\u00a0work together.\u00a0<\/p>\n

While we watch this play out over the next decade, as we wonder whether the USMCA will last forever or be\u00a0terminated\u00a0in 2036 (or earlier), what\u00a0should America\u2019s private and public sectors do?\u00a0<\/p>\n

This much is clear, to begin with: the government needs to do more outreach, with more emphasis on the philosophy behind our FTAs, and America\u2019s businesses need to do more internal training\u00a0to ensure that they follow the law. Either source enough locally to qualify for the program, or\u00a0don\u2019t\u00a0try to obtain the program\u2019s duty-free benefits.\u00a0Never\u00a0<\/em>issue unsubstantiated FTA certificates. It\u2019s\u00a0as simple as that.<\/p>\n

Rather than worrying about\u00a0whether\u00a0the USMCA will last past 2036, America\u2019s businesses\u00a0need to\u00a0focus\u00a0on whether\u00a0they\u00a0<\/em>will.\u00a0<\/p>\n

For generations, America\u2019s\u00a0businessmen\u00a0have been told that delivering shareholder value required buying the cheapest parts from the cheapest sources, no matter how distant those\u00a0\u201clow-cost\u00a0country\u201d sources may be. Such unpatriotic,\u00a0self-destructive advice has always been wrong, and public\u00a0sentiment has proven it to be incredibly unpopular as well.\u00a0<\/p>\n

The best advice to anyone concerned about the future of the USMCA is simply this: educate your engineering, purchasing,\u00a0legal,\u00a0and product development teams\u00a0about the workings of FTAs, to prevent the painful audits and costly penalties that come from FTA abuse. Turn away from\u00a0dependence on Chinese vendors, and\u00a0open your minds to domestic sourcing.\u00a0<\/p>\n

If\u00a0an\u00a0American business wants its government and its fellow Americans to support it, then it needs to start supporting its fellow American businesses as well.\u00a0<\/p>

Read more Switzerland revolutionizes direct democracy using digital signatures: Will the US follow?<\/a><\/p>\n

Image: RawPixel.com<\/em><\/strong><\/span><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

President Trump mentioned that he\u00a0\u201cmay not renew\u201d\u00a0the United States-Mexico-Canada Agreement (USMCA), the replacement of the\u00a0North American Free Trade Agreement (NAFTA) that he signed during his first term.\u00a0 Read more New York, Delta Airlines go woke and woker This remark naturally concerned people who have built their businesses on NAFTA commerce, but there are so many […]<\/p>\n","protected":false},"author":1,"featured_media":1217,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,556],"tags":[557],"class_list":["post-1219","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-nafta","tag-related-topics-nafta-usmca-trade"],"yoast_head":"\nReforming North American Trade - Interstate Logistics Hub<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/interstatelogisticshubs.com\/?p=1219\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Reforming North American Trade - Interstate Logistics Hub\" \/>\n<meta property=\"og:description\" content=\"President Trump mentioned that he\u00a0\u201cmay not renew\u201d\u00a0the United States-Mexico-Canada Agreement (USMCA), the replacement of the\u00a0North American Free Trade Agreement (NAFTA) that he signed during his first term.\u00a0 Read more New York, Delta Airlines go woke and woker This remark naturally concerned people who have built their businesses on NAFTA commerce, but there are so many […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/interstatelogisticshubs.com\/?p=1219\" \/>\n<meta property=\"og:site_name\" content=\"Interstate Logistics Hub\" \/>\n<meta property=\"article:published_time\" content=\"2026-06-13T08:37:00+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/interstatelogisticshubs.com\/wp-content\/uploads\/2026\/06\/997d81bce92a82f93c25e4283b0b680a.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"640\" \/>\n\t<meta property=\"og:image:height\" content=\"346\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/interstatelogisticshubs.com\\\/?p=1219#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/interstatelogisticshubs.com\\\/?p=1219\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\\\/\\\/interstatelogisticshubs.com\\\/#\\\/schema\\\/person\\\/93038961905b9b4e826fad647449a9a4\"},\"headline\":\"Reforming North American Trade\",\"datePublished\":\"2026-06-13T08:37:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/interstatelogisticshubs.com\\\/?p=1219\"},\"wordCount\":1191,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/interstatelogisticshubs.com\\\/?p=1219#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/interstatelogisticshubs.com\\\/wp-content\\\/uploads\\\/2026\\\/06\\\/e6f8a23526e48967db7db434dc65c292.jpg\",\"keywords\":[\"Related Topics: NAFTA, USMCA, Trade\"],\"articleSection\":[\"Economy\",\"NAFTA\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/interstatelogisticshubs.com\\\/?p=1219#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/interstatelogisticshubs.com\\\/?p=1219\",\"url\":\"https:\\\/\\\/interstatelogisticshubs.com\\\/?p=1219\",\"name\":\"Reforming North American Trade - 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