Durkin: North American Trade Is Critical to U.S. Manufacturing

America’s relationship with Mexico and Canada is the most complementary and symbiotic set of trade relationships the United States has, NAM Vice President of International Policy Andrea Durkin said on Grant Thornton’s DC Dispatch podcast recently.

• Durkin’s comments come as U.S. and Canadian trade leaders meet to resolve differences ahead of proposed U.S. tariffs on Canada scheduled to take effect on Aug. 19.

The case for USMCA: “We export one-third of all U.S. manufactured goods to Canada and Mexico,” Durkin told Grant Thornton’s David Sites and Colin Wilhelm. “That is more than to the next nine U.S. manufacturing export partners combined.”

• “And since implementation of USMCA, 15 of 18 manufacturing sub-sectors have increased their exports to Canada and Mexico, and they’re growing faster than to other markets.”

A symbiotic relationship: Many companies straddle these borders and benefit hugely from drawing resources from—and selling goods to—all of North America. “Half of what we’re buying from Canada and nearly 70% of what we buy from Mexico is trade within a single corporate parent,” Durkin pointed out. “It is truly regionalized co-production.”

• Durkin emphasized that America’s trade relationship with Mexico and Canada helps it compete with China, and that the administration must balance its desire to onshore as much production as possible with keeping that regional partnership strong.

The review process explained: As a key champion of the USMCA when it was originally passed, the NAM urged policymakers to renew and modernize the agreement during its scheduled review in July. The Trump administration decided not to pursue a 16-year renewal this year, but as Durkin told the podcast hosts, that was no catastrophe.

• The agreement will stay in force for another decade, and the three countries will continue to conduct annual reviews (CNBC).

Priorities for cooperation: Durkin laid out a few priorities for policymakers as they consider the ongoing maintenance of the agreement.

• Strengthen implementation and coordination: “With the volume of trade and breadth of this agreement, there will always be implementation issues on any given day,” she said, noting the three countries should continually look for ways to improve coordination, make trade at the border more fluid and manage risks more effectively. “That can always be improved and should be regularly discussed.”
• Build on the agreement: The countries should pursue additional cooperation on customs facilitation, energy, AI policy or critical minerals policy, without necessarily reopening the USMCA itself, Durkin continued. 
• Address changes carefully: They should also continue discussions on consequential issues that could affect how companies use the agreement, including potential changes to rules of origin. 

The geopolitical angle: Durkin also highlighted the administration’s push to compete with China.

• Emphasizing that competition with China will continue to drive U.S. investment in the “technological race in advanced manufacturing,” Durkin pointed out the importance of U.S. policies aimed at helping manufacturers “retain competitiveness in advanced manufacturing” and “leapfrog” in sectors where it needs to maintain preeminence.
• At the same time, she stressed the need to reduce overreliance on single markets and supply chain “choke points,” arguing that manufacturers’ global footprint and diversification with U.S. allies are a “source of resilience.”

The bottom line: Durkin urged policymakers to work closely with manufacturers as they consider changes to the agreement—particularly aground rules of origin, where adjustments can ripple across supply chains and affect costs and competitiveness across the sector.

• “Our advice to the government is: Please work with us,” she said. “We will be happy to test-proof some innovative ideas around rules of origin.”
• Durkin said manufacturers can help policymakers determine which parts of the production process are most important to retain in the United States—and where the region can benefit from integrated North American supply chains, including access to raw materials that are not available domestically.