Trilateral Trade

Governor Urges Renewal of United States-Mexico-Canada Agreement

By Tom Leyde

A trade agreement between the United States, Mexico and Canada is up for U.S. congressional review this year, and Southern Arizona businesses are concerned about the outcome and how it will affect the area’s economy.

The United States-Mexico-Canada Agreement was expected to be reviewed in July at this writing. Billions of dollars in trade between the three countries are at stake.

USMCA replaced the North American Free Trade Agreement, which had no provision for review. Each country involved in USMCA must choose one of three options:

• Renew the USMCA for 16 more years, with another joint review in six years.

• Withdraw from USMCA, following a minimum of six months’ notice to other members.

• Continue with the USMCA without renewing. In that case, the agreement would continue for 10 years and expire in 2036.

The trade agreement is so critical for Arizona that Gov. Katie Hobbs went to Washington, D.C., in March to lobby for renewal and instituted a study on the issue. It was prepared by Arizona State University’s Seidman Research Institute, associated with ASU’s W.P. Carey School of Business.

On May 18, Hobbs addressed USMCA at an event by The Chamber of Southern Arizona, hosted by jet manufacturer Bombardier in Tucson, titled “The Future of USMCA: What it Means for Southern Arizona.”

“The trade agreement is critical to each of our state’s industries, and that is perhaps most true here in Southern Arizona, where our partners in Mexico are just a stone’s throw away,” Hobbs told the roughly 300 people who attended the event at a Bombardier hangar.

Hobbs said that Arizona’s trade is at record levels and that the state is ranked first in the U.S. for foreign direct investment. She also said that Arizona exports are growing at a record rate and the state is at the epicenter of the world’s most advanced technologies.

“We know that this is not just a trade policy discussion happening in D.C.: This is a decision that affects jobs in Tucson, farms in Yuma, businesses in Nogales and families across out entire state.”

Mexico, Hobbs noted, is Arizona’s No. 1 trading partner. U.S. goods trade (exports plus imports) with Mexico totaled an estimated $872.8 billion in 2025, according to the Office of the United States Trade Representative. Canada is also a trusted trade partner for agriculture, energy, aerospace and critical minerals. 

“The extent of North American trade is not just seen in a report or a spreadsheet, but throughout our supply chain,” Hobbs said. “You see it in the engineers collaborating across borders, in the parts that cross multiple times before becoming a finished product, and in the workers whose livelihoods depend on those connections. A component may begin in Canada, be refined in Arizona, and be assembled in Mexico … each step creating jobs and strengthening all three economies along the way.”

While USMCA isn’t perfect and businesses agree there is room for improvement, Hobbs believes that “USMCA 2.0 could strengthen rules for origin beyond the automotive sector.” 

“It could enhance labor and environmental compliance, strengthen legal protections for Arizona companies, and reinforce environmental and energy cooperations … but overwhelmingly, what’s best for Arizona, and by extension America, is not a complete overhaul. We need continuity, refinement and stability.”

While in Washington, D.C., Hobbs said, “Our message to leaders … was simple: Protect what works. Make adjustments where needed, but do not undermine the trilateral framework that has made America profitable for over a decade.”

The governor said it was disheartening to hear from the Trump administration (which first put USMCA in place) that tariffs would be part of any deal moving forward and that it plans to skirt any congressional review of the agreement.

“At this moment,” Hobbs said, “we need to figure out if the United States, Canada and Mexico will move forward in competition with each other, or as a united trade bloc that will compete against the rest of the world. And to me, it’s clear that the path forward is to build stronger partnerships with our allies, not create uncertainty that weakens supply chains and raises costs.”

The governor told those in attendance that their voices continue to be incredibly important in ensuring that the future of North American federal trade policy reflects the needs of Southern Arizona’s businesses and workers. 

“As we approach the USMCA joint review, I will continue being Arizona’s voice is Washington. This is our opportunity to renew an agreement that puts America first while recognizing that our strength comes from a competitive, connected North America.”

Pictured above – Katie Hobbs, Governor, State of Arizona. Photo courtesy The Chamber of Southern Arizona