America is celebrating its 250th birthday. From a global context, compared to other nations, this is like a teenager full of potential along with the awkwardness of youth. Post-World War II globalization is waning, and a new order is emerging as export-oriented countries organize trade agreements without U.S. involvement.
For the agriculture industry, which generates $1 in $5 of net income through export markets, the ramifications are immense.
USMCA: Critical to ag
A critical trade agreement, the United States-Mexico-Canada Agreement, is now in annual review mode until 2036 because the U.S. opted earlier this month not to renew the USMCA for another 16 years. That decision injects greater uncertainty in agriculture, technology, manufacturing and related services.
The 2026 review of this agreement, formerly known as the North American Free Trade Agreement, or NAFTA, was a mandatory six-year evaluation to determine whether to extend the agreement or allow it to expire in 2036.
For ag producers, the implications of this negotiation extend beyond simple market access. Increased policy uncertainty, targeted disputes, stricter enforcement, and possible tariffs and sanctions could weigh on future trade. Agriculture is deeply interconnected with the broader trade and regulatory negotiations also unfolding in technology and manufacturing across all three countries.
North America strong
In my opinion, the U.S. cannot operate alone, particularly in agriculture, in the quarter century ahead of us. The integration of the agriculture markets among the three countries has been established over the past three decades and would be difficult to unravel. Canada and Mexico account for more than one-third of U.S. agriculture exports, with Canada purchasing $29.5 billion and Mexico $30.6 billion. Flipping the coin, U.S. agriculture relies heavily on imports, receiving $41 billion from Canada and $43.9 billion from Mexico, according to the USDA Economic Research Service and the World Bank.
Granted, for some agriculture industries this creates intense competitive pressure. However, it also provides year-round availability and overall efficiency in some of the key food and fiber systems.
As the global economy evolves toward 2050, global trading blocks will emerge. North America will compete against Europe and Asia, while the global south will find it advantageous to secure trade agreements among multiple partners where no single country can dominate the negotiations.
The most powerful block — Canada, Mexico and the U.S. — represents 6.3% of the global population and 29.6% of global gross domestic product. The three account for approximately 20% of global agricultural exports. This concentration of economic power, income and wealth should not be ignored as the ag industry navigates a combination of cyclical and structural change.
The outcome of this agreement will shape trade relationships and investments in economic conditions for all three North American countries.
The next decade
I startled audiences in California recently with an observation: The current power and leaders in the U.S., China and Russia will likely be out of power early in the next decade. New power brokers within their institutions and governments will emerge, shifting the moves on the chessboard of global economics.
We need to think what the next strategic move is for the U.S. and the North America trading block.