Greg Hewitt, CEO of DHL Express U.S.
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In July, the United States opted against renewing the U.S.-Mexico-Canada Agreement (USMCA) for another 16 years (registration required). While the trilateral trade deal remains in effect until 2036, the decision has triggered an annual joint review, along with a great deal of uncertainty for U.S. companies that do business with their closest neighbors.
Since 2020, the USMCA has supported one of the most interconnected and competitive trading relationships in the world—enabling efficient and reliable supply chains across three of the world’s largest and most complementary economies, while also setting the standard for what other trade agreements can do. With annual re-negotiations and potential modifications now in play (unless a new 16-year extension is eventually agreed upon), predictability is at risk.
If your business trades with Mexico and Canada, you may no longer be able to fully rely on the stability, incentives and trade simplification that have made it easier to plan and execute cross-border sales and purchasing strategies.
To understand the importance of the USMCA, consider that Mexico and Canada account for nearly one-third of U.S. merchandise exports, and 82,000 U.S. small and medium-sized businesses exported to Canada while 53,000 exported to Mexico in 2016. The current uncertainty surrounding the agreement reminds us of the importance of trade deals and should encourage business leaders to stay informed about their progress and implementation.
Why Trade Deals Matter
At their core, free trade agreements (FTAs) remove financial and bureaucratic barriers, making it easier to export and import goods. FTAs can reduce or eliminate tariffs, creating a stable environment where businesses can more easily forecast costs and plan for growth and expansion into new markets. They can also streamline customs procedures and standardize trade rules, reducing delays and making it easier to move goods across borders.
Tracking The Changing Trade Environment
Despite change and uncertainty, trade has found a way and continues to be critical for thousands of U.S. businesses. According to my organization’s “2026 Global Connectedness Report,” trade in physical goods grew faster last year than in any year since 2017 (excluding post-pandemic surges).
Part of the reason for the continued growth is the pathway offered by FTAs, including many bi-lateral agreements negotiated recently and over the years by the United States. Today, the U.S. has deals in place with 20 nations, but is also still negotiating and amending agreements according to new frameworks that have been initiated. In fact, the current administration has launched a series of deals and potential deals that differ from traditional FTAs because they exclude a role for Congress and generally allow for more frequent modifications.
For companies doing business across borders, keeping track of tariffs, new agreements and changes to existing deals can be challenging. Organizations including the Council on Foreign Relations and the Global Business Alliance offer trade and tariff trackers to help businesses stay informed. To get a sense of the extent of recent activity, as the U.S. engages with Canada and Mexico, it has also been negotiating with Jordan, Indonesia and India, among others.
Leveraging Trade Agreements For Small Businesses
Around one-third of exported small business merchandise goes to markets covered by FTAs, with Canada and Mexico being the top trade partners. Clearly, trade agreements can be particularly beneficial for smaller companies and can have a significant impact on margins.
To leverage FTAs, leaders should rely on research, technology and international shipping experts to identify key markets and opportunities that align with goods and business plans. Start this research with an analysis of key markets and trade deals. The U.S. International Trade Administration offers a host of tools and market intelligence that can assist in these efforts.
Once you enter a market, management software can help automate rules-of-origin determinations, calculate duties and taxes, generate certificates of origin and manage recordkeeping. International shipping and logistics partners can also help businesses navigate tariff and regulatory changes, ensure compliance and optimize supply chains.
As the USMCA is being reconsidered, leaders should take time to understand the contours of the agreement, the provisions that matter for the business (whether the company is trading with Mexico and Canada or considering it) and additional deals that are in effect or under consideration. While uncertainty is part of the equation in today’s trade environment, FTAs remain a strong option for companies as they look to diversify revenue streams and take advantage of the millions of potential customers outside our borders.
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