Input to USTR: USMCA’s Overlooked Value

As submitted November 2, 2025\

One question underpins the last decade of U.S. trade policy: what are trade agreements worth? Common criticisms cite everything from soaring trade deficits and manufacturing job losses to environmental degradation and infringements on national sovereignty.

The United States-Mexico-Canada Agreement (USMCA) is no exception. Since its entry into force in 2020, the deal has faced criticism on all these fronts, sitting at the center of regional conversations about labor rights, immigration, agricultural practices, and more.

But the far-reaching public debate over USMCA still misses three of the agreement’s core benefits: its ability to successfully resolve disputes, its crucial role in stabilizing trade markets to the benefit of North America’s workers, and its strategic value shoring up critical supply chains.

1. Dispute Settlement Works Better Than We Think

The NAFTA renegotiations that produced the USMCA highlighted the difficulty of resolving long-standing, sensitive trade conflicts. Disagreements over dairy and softwood lumber trade date back decades, and enduring disagreements over these issues are frequently cited by critics to claim that the dispute settlement mechanism is broken. More recently, automotive rules of origin have become equally controversial.

These high-profile disputes are important, but they represent only a tiny fraction of the bigger picture in regional trade cooperation.

US-Canada trade totaled around $900 billion in 2024. As only a small share of that total trade, contentious sectors like US exports of dairy products to Canada and Canadian softwood lumber exports to the US have taken an out-sized role in the conversation over USMCA enforcement.

We must be cautious in inferring too much from headline-grabbing disputes. For every publicized non-compliance case, there are other cases that are resolved quietly and amicably, resulting in compliance and maintaining seamless cross-border commerce. These successful resolutions are a truer measure of a functioning trade system. We cannot let a few persistent, politically charged outliers obscure the system’s overwhelming effectiveness in ensuring the predictability of rules across the continent.

2. Rules Stabilize Markets—and Stability Helps Workers

The single largest critique of US trade deals over the last decade is that market liberalization costs jobs. Analyses of USMCA’s net effects on employment almost always focus on whether import competition causes domestic industries to contract.

But the largest threat to stable employment is not slow, predictable competition from imports. It is the market instability that comes from policy uncertainty. Unpredictable, sharp fluctuations in the market have been shown repeatedly to depress wages, dampen job growth, and halt capital investment. Volatility is, in short, toxic for workers.

But volatility is also controllable. Most month-to-month market volatility is a direct result of unilateral policy changes—sudden threats of tariffs, unexpected border closures, or disruptive regulatory shifts—that inject uncertainty into market access and the rules governing trade.

Trade agreements like USMCA help reduce these policy disruptions by locking in rules and providing a mandatory structure for resolving disagreements. By limiting the power of any single government to arbitrarily alter market conditions, the USMCA reduces the market fluctuations that punish workers through hiring freezes and deferred investment. 

3. Securing Critical Supply Chains

USMCA also plays a role in supply chain security and resilience. The agreement incentivizes companies to source and manufacture within North America. With the recent push toward nearshoring production, the agreement reduces dependence on volatile overseas markets while shortening logistics routes.

This opens the door for, particularly in the United States, for more access to Mexican pharmaceuticals and Canadian energy—two sectors in which the US faces persistent need and strong strategic incentives to keep supply chains close to home.

Moving Forward

USMCA’s greatest value is not in creating new trade, but in insulating existing trade from political whims, providing the predictability that businesses need to hire, invest, and grow.

By providing functional mechanisms to resolve disputes and setting clear, durable rules, the agreement is an essential piece of infrastructure that stabilizes the North American market, ensuring jobs are secured by structure, not subject to sudden political shocks.