The United States is cautioned against rushing to extend the U.S.-Mexico-Canada Agreement (USMCA) for another 16 years without addressing significant trade loopholes. Since the agreement's implementation, overall steel imports into Mexico have climbed 45%, and imports of Mexican rebar in 2024 were approximately 1,148% above their average level before USMCA.

These increases are attributed to steel shipments from China, South Korea, and Vietnam entering North America through Mexico and Canada, exploiting weaknesses in the current trade framework. The USMCA was designed to strengthen North American trade ties and ensure that preferential treatment applies only to goods genuinely produced within the region.

Negotiations to close these loopholes are underway, with discussions with Mexico being the most advanced. Talks with Canada may intensify following President Trump's recent imposition of section 338 tariffs. Experts argue that the agreement should adopt a strict "melted and poured" steel requirement to ensure that steel benefiting from USMCA preferences is truly produced in North America rather than merely processed after originating elsewhere.

Extending the USMCA without resolving these issues could forfeit the United States' leverage to enforce fair trade practices and protect domestic industries.

Sources