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Washington has repeatedly used trade policy and U.S. market access over the past decade to advance broader economic security priorities with its trading partners. The Trump administration’s decision not to renew the U.S.-Mexico-Canada Agreement on July 1, during a mandatory six-year review, is the latest example of this approach.

Despite the inclusion in the U.S. trade representative’s announcement that deficits were a prevailing concern, conversations with industry sources and past statements by the administration indicate that ongoing negotiations increasingly focus on limiting Chinese supply chain inputs by embedding economic security principles into the continent’s trade architecture. Incorporating provisions like investment screening, export controls, and technology policy into the agreement would make them considerably more durable than tariffs or executive actions. But durability is only part of the strategy.

The more consequential feature of Washington’s approach is that initiating the review process also creates a recurring mechanism for leverage. Article 34.7 of the agreement makes six-year check-ins a standing requirement for as long as the agreement exists. Having declined to confirm this year, Washington has now triggered a more compressed, escalating version of that same leverage: annual reviews that continue until all three governments agree to renew — at which point the mechanism reverts to the ordinary six-year cadence — or the agreement lapses in 2036.

Washington therefore holds two cards to achieve its objectives: a standing veto point it can exercise every six years in perpetuity, and — having exercised it this cycle — a compounding annual pressure campaign it can sustain until its neighbors concede or the treaty expires. Whether that approach produces a resilient continental supply chain bloc adaptable to Chinese threats or simply entrenches recurring renegotiations will largely depend on how much Canada and Mexico are willing, and able, to concede.

A skeptic could still object that this reads too much design into what may just be improvisation. U.S. President Donald Trump has, after all, repeatedly emphasized trade deficits and mused publicly about abandoning the agreement altogether for bilateral deals with Mexico and Canada. Yet the administration has so far chosen not simply to exit the agreement or rely on tariffs alone, instead following the more institutional path of triggering Article 34.7’s review mechanism. More importantly, sources describe a negotiating agenda centered on economic security provisions alongside more traditional trade grievances. Whether or not this reflects a fully coherent strategy, the substance of the negotiations suggests something more consequential than a campaign to reduce trade deficits alone.

My conversations with trade associations in Washington, Chinese and U.S. companies, and consultants in Mexico indicate this pressure is already shaping government policy before negotiations have concluded. Chinese investments in Mexico — especially in the automotive sector — have reportedly been stalled or canceled pending the review, while ongoing talks with the United States include supply chain resiliency measures in electric vehicles, automotive manufacturing, aerospace, defense, and — to a lesser extent — biotechnology and pharmaceuticals. Sustained U.S. pressure also appears to have contributed to Mexico’s decision in 2025 to raise tariffs on a range of Chinese imports.

The White House’s demands do not fundamentally break with past U.S. policy. Washington has been moving in this direction for much of the past decade, with successive administrations pushing to strengthen North America’s collective resilience against geopolitical shocks. Under President Joseph Biden, this broader shift was reflected in industrial policies such as the Inflation Reduction Act, which reinforced North American supply chains in sectors such as electric vehicles and batteries, as well as expanding on first Trump administration efforts to build a “resilient North American critical minerals supply chain” with Canada. Biden also sought closer coordination with Ottawa on issues including tariffs on Chinese electric vehicles, export controls, and foreign investment scrutiny, and with Mexico through the High-Level Economic Dialogue, which included a “Building Back Together” pillar on reducing vulnerabilities in critical supply chains.

The Biden administration also pursued deeper trilateral economic integration with Canada and Mexico in strategic sectors through the North American Ministerial Committee on Economic Competitiveness and related semiconductor initiatives in 2023. Beyond North America, Biden pursued similar objectives through initiatives such as the Indo-Pacific Economic Framework and Minerals Security Partnership, which sought to strengthen supply chain resilience and reduce strategic dependencies through greater coordination with U.S. allies and partners.

While Biden relied more heavily on industrial incentives and allied coordination, and Trump has emphasized tariffs and economic leverage, both administrations increasingly used North American economic integration to advance broader U.S. economic security objectives. The question now is how much further Canada and Mexico are willing and able to venture under Washington’s evolving economic security agenda.

Canada has gradually aligned many economic security policies with Washington over the past decade. Following extensive bilateral coordination with the United States, Ottawa in 2024 adopted 100 percent tariffs on Chinese electric vehicles and has joined or pledged support for U.S.-led supply chain resiliency initiatives — especially on critical minerals — under the first and second Trump administrations and under Biden. It also expanded national security reviews under the Investment Canada Act and adopted tougher scrutiny of Chinese investment in critical minerals and telecommunications. Perhaps ironically, these past efforts also somewhat limit Canadian Prime Minister Mark Carney’s ability to make dramatic new economic security concessions during the ongoing negotiations — a dynamic that may also partly help explain the Trump administration’s frustration with Canada’s negotiating position. U.S. Trade Representative Jamieson Greer recently criticized Canada’s lack of “concessions” in informal negotiating rounds.

Mexico presents a much larger opportunity — and challenge — for Washington. Chinese investment in Mexico accelerated following the first U.S.-Chinese trade war beginning in 2018 as manufacturers sought to preserve preferential access to the U.S. market. At the same time, Mexico emerged as the principal beneficiary of nearshoring as multinational companies diversified some supply chains away from China in response to tariffs, pandemic-era disruptions, and successive U.S. industrial and economic security policies. These developments strengthened North American manufacturing, but also heightened U.S. concerns that Chinese companies could use Mexico as a backdoor into the American market. For Mexico City, the broadening of discussions on the agreement beyond traditional trade grievances creates opportunities for compromise, allowing it to offer concessions in areas beyond trade to preserve favorable market access.

There are, of course, also domestic political and national security considerations driving such economic security policies in Mexico and Canada. Ottawa, like many other developed economies, shares concerns with Washington about offshoring manufacturing to China and supply chain resilience. It also saw political relations with Beijing deteriorate over what it perceived as politically motivated detentions of two of its citizens in China beginning in 2018. Likewise, Mexico City hopes to use its recent tariffs on Chinese imports to protect domestic industries, diversify inbound foreign investment, and accelerate industrial upgrading. These overlapping interests create opportunities for Washington to encourage closer North American policy alignment, even when national priorities diverge.

Yet the emergence of a North American economic security bloc is far from guaranteed. Both Canada and Mexico continue to resist elements of Washington’s agenda. The Carney government, for example, has recently signaled greater openness to limited Chinese electric vehicle imports as part of a broader effort to diversify trade following the Trump administration’s tariffs. Meanwhile, one source also noted that Mexico has struggled to balance scrutiny of Chinese investment in strategically sensitive sectors while preserving broader commercial ties with Beijing — a dynamic many other countries have likewise contended with. And both governments have sought a cleaner renewal of the agreement than Washington is willing to accept.

The United States nevertheless remains uniquely positioned through the agreement, tariffs, and its overwhelming market leverage to encourage — or compel — its neighbors to align more closely with its economic security priorities. But disagreements within the bloc and uneven willingness to provide concessions mean that negotiations could produce different outcomes. In a best case for Washington, they may culminate in a revised trilateral agreement with economic security commitments embedded for another six years. Alternatively, persistent disagreements could keep the parties in perpetual negotiations for the coming decade, locking in uncertainty and ultimately ending in a collapsed agreement. Such a breakdown could also encourage Canada and Mexico to accelerate economic diversification efforts, undermining the continental alignment Washington is trying to construct.

The governments nevertheless have strong incentives to preserve the agreement: Continental integration supports both economic and national security objectives for all three. For Canada and Mexico, the challenge will be to concede enough to preserve preferential access to the U.S. market without allowing Washington’s review leverage to turn the agreement into a permanent negotiation over China policy. For Washington, the difficulty is in determining how hard it can bend its two neighbors without breaking the integration it seeks. The ultimate test of Washington’s approach will therefore not simply be whether it extracts new economic security commitments from Canada and Mexico, but whether a North American bloc constructed through recurring pressure can remain a stable and credible basis for long-term integration.

Daniel Rechtschaffen leads the United States and Canada political risk team at Control Risks, where he advises multinationals on U.S.-Chinese relations, Indo-Pacific geopolitics, economic security, and technology policy to multinational companies. Previously, he was government relations manager at the American Chamber of Commerce in Shanghai. Daniel has written extensively on China, economic security, and geopolitics, and is regularly cited by others in the field. He has a master’s degree in China studies from the University of Washington and a bachelor’s degree in history from Concordia University. He is fluent in English and Chinese.

Image: Shealah Craighead via Wikimedia Commons