Navigating Trade Waters: A Deep Dive into the USMCA Joint Review Process and Its Impact on China and Mexico – Part Two: The Mexico-US Trade Landscape and Harris’s Potential Vision  

This is the second of a three-part series about the USMCA joint review process, focusing on China, Mexico, and competing visions of a “worker-centered” trade policy. Part one introduces the USMCA joint review process and explores how US trade policy would likely operate during Trump’s second term. Part two outlines some of the major trade issues that will be on the table during joint review, focusing on the Mexico-US relationship, and anticipates Harris’s likely approach to trade policy. Part three offers a critique of the worker-centered trade policy developed under the Biden administration, presents an alternative, and suggests new avenues for multi-stakeholder participation that Harris’s approach might create.

Lighthizer’s Plan

Part one of this series focused on former US Trade Representative (USTR) Robert Lighthizer’s approach to trade and how it would flavor the United States-Mexico-Canada Agreement (USMCA) joint review process in 2026 if Donald Trump were to win the upcoming presidential election. As a refresher, and to juxtapose with its predictions about Kamala Harris’s approach to trade, this part begins by describing five specific trade policy changes that Lighthizer recommends in his 2023 book No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers.

First, Lighthizer urges future administrations to “demand fair trade” and “reciprocity” from trading partners through vigorous enforcement of existing trade policy tools such as antidumping and countervailing duties, Section 301, and other trade remedies. Second, the US should “demand fairness” and “persuade other countries to take us seriously” through unilateral action, “firmly and consistently [using] Section 301 to force other countries to give us fair access” to their markets and denying them access to ours when they refuse. Third, the US needs to “set minimum standards [related to environment, labor, safety, sanitation, and other areas] that all products, whether domestically produced or imported, must meet” and apply a duty to imports that do not meet those standards to offset their “unfair” advantage. Fourth, although in general he feels that “industrial subsidies are not a good idea”, Lighthizer argues that technological competition with countries that provide industrial subsidies such as “Communist China”, Europe, Korea, and Japan will require government support, citing the bipartisan CHIPS and Science Act signed into law by President Joe Biden as “a good first step”. Finally, and perhaps most critically, Lighthizer stresses the importance of balanced trade, and proposes achieving it by requiring importers to have a certificate for each imported product “showing that there was a product of equal value exported”, by authorizing the Federal Reserve to “moderate the foreign demand for dollars” through an adjustable “market access charge” on foreign investment in the US, or by imposing a progressively higher tariff on all imports “year after year until we achieve balance.” Besides these five changes, Lighthizer adds, the US’s “most urgent priority should be strategic decoupling from China.”

There is so much to unpack in these recommendations (e.g., the actual significance of a trade deficit), and interested readers should spend some time doing that unpacking. But this article is meant to anticipate the next administration’s likely approach to the 2026 USMCA joint review. Overall, Lighthizer’s plan portends a negotiation centered around a sense of “fairness” judged by whether Mexico and Canada purchase an equal value of goods from the US as the US purchases from them, and whether those goods are produced with “advantages” such as labor, environmental, safety, or sanitation standards that fall below a US-determined threshold. The US would enforce this fairness through unilateral restriction of market access to offending goods and countries, primarily by raising tariff rates but perhaps by imposing new obligations on importers or even weaponizing monetary policy. And, looming over these negotiations around fairness in North American value chains, would be a US injunction to elbow China out.

Superficial Similarities, Substantial Differences

Stripping these recommendations down to their rawest elements reveals some similarities between 2024’s presidential candidates’ likely approach to trade. Most relevant to this article’s perspective on the USMCA joint review process, either administration would likely:

• Continue to use existing tariff barriers such as antidumping and countervailing duties, Section 232, and Section 301 to equalize prices and support domestic policy goals;
• Support congressional efforts to incentivize domestic production and improve US firms’ global competitiveness through legislation such as the CHIPS and Science Act;
• Seek to enforce US standards in global supply chains through trade agreements and legislation such as the Uyghur Forced Labor Prevention Act (UFLPA); and
• Frame industrial policy in terms of competition with China.

These similarities, however, can be explained by the fact that any administration—future, present, or past (at least in the modern trade era)—faces the same basic challenges and possesses the same set of tools. Even UFLPA, which is novel in its attempt to locate region-specific forced labor in scattered value chains’ most distant peripheries, traces its lineage back to the Tariff Act of 1930, which prohibited imports produced “wholly or in part” with forced labor nearly a century ago. More interesting and informative than the similarities between the candidates’ likely approaches to trade are the differences. Harris’s administration would depart substantially from Lighthizer’s recommendations in the following ways, among others: 

• Balance of trade (i.e., trading equal values of goods with each partner country) would not overshadow other considerations;
• Unilateral actions and bilateral negotiations would not take precedence over multilateral consensus-building;
• “Fairness” would depend on whether trading partners played by the same rules rather than whether the US benefited equally from a given transaction;
• Standard-setting would rely more heavily on collaboration with allies and revolve around the structure of global value chains;
• The executive branch would likely support direct subsidization of workers displaced by offshoring, not just of corporations in strategic industries;
• Competition with China would focus not on decoupling but on derisking supply chains, especially where they intersect with matters of national security, climate change, and human rights.

Perhaps the most fundamental difference between the candidates’ trade policies is Lighthizerism’s assessment that the US economy broadly has been structurally shortchanged by the terms of its trade agreements. This is not just a rhetorical distinction—it has real impacts on the shape of the political economy, the quality of international relationships, the flow of cross-border business, and the conditions of people’s everyday lives. To be sure, both administrations share a critique of globalization and its effects on American industry and workers. The early pages of No Trade Is Free list the number of jobs per industry that disappeared from the United States between the North American Free Trade Agreement’s (NAFTA’s) implementation in 1994 and 2001—108,773 in “electrical electronic machinery”, 83,643 in “motor vehicles and equipment”, 83,258 in “textiles and apparel”, and 48,306 in “lumber and wood products.” Although Lighthizer acknowledges the difficulty in linking these job losses to NAFTA itself, his transactional approach to trade agreements emerges directly from a presumption of causality—that the deal’s terms, including its permanence, were unfair because they enabled Canada and Mexico (but especially Mexico) to perpetually take advantage of the US’s relatively high export prices and purchasing power, forever exporting more to the US than the US exports to them. Lighthizerism frames these trade deficits as national injustices, loopholes in a discriminatory global trading system that must be closed before US industry can once again thrive in price competition with leaner low- and middle-income countries. Sewing up these loopholes involves withholding market access until partner countries agree to equal-value exchanges; imposing US standards through unilateral sanctions, especially tariffs; and subsidizing corporations, but probably not workers, in strategic industries. 

Deducing Harris’s Approach

Harris as an individual, like Lighthizer and virtually any other conscientious observer of international trade, recognizes the pitfalls of the WTO-based system. She has publicly expressed reservations about trade deals, including by opposing the Trans-Pacific Partnership (TPP) and USMCA, not because they were “unfair” through a balance-of-trade lens but because they contained weak environmental and labor protections. As Vice President to Joe Biden, Harris has been part of an administration whose approach to trade—while retaining the previous administration’s tariffs, expanding targeted sanctions, and condoning rivalry with China—emphasizes balancing global powers through constructive, values-based multilateralism; bolstering domestic industry through incentives such as CHIPS and the Inflation Reduction Act; improving conditions for workers; and restructuring global value chains. As President, Harris would likely stay the course and, in the context of the USMCA joint review, perhaps open some new relational opportunities.

In the absence of an explicit trade policy platform, however, deducing Harris’s particular approach requires a workaround. Deputy National Security Advisor for International Economics Michael Pyle noted in 2023 that the Biden administration situates supply chain resilience, climate policy, clean energy, anti-corruption regulations, global tax structures, and other spheres of action—but explicitly not trade—“at the core of international economic policy.” Mira Rapp-Hooper, Special Assistant to the President and Senior Director for East Asia and Oceania on the White House National Security Council (NSC) and former advisor to Harris, coauthored a book in 2020 with Rebecca Lissner, Harris’s current Deputy National Security Advisor, that seems to offer additional explanation. An Open World: How America Can Win the Contest for Twenty-First Century Order is a road map for the next administration, unfurling a grand strategy based on openness and multilateralism that aims to safeguard American prosperity, prevent authoritarian competitors from developing closed spheres of influence, and strengthen economic interdependence among democratic allies.

Rapp-Hooper distinguishes this approach from the alternative, explaining that a second Trump term would operationalize an inward-facing worldview that “embrace[s] adversaries, and [denies] shared threats,” jeopardizing the US’s longstanding system of alliances and giving  allies “a reason to believe that they [have] to think of how to provide more for themselves.”  She further argues that Trump’s first term caused permanent damage to the US’s credibility, and that the next administration must therefore seek creative ways to reassure allies by making alliances “more resilient and modernized,” such that allies could more easily withstand the volatility and protectionism that a future Trump or Trump-like administration would re-introduce to the US’s foreign policy. 

On Multilateralism

An Open World proposes reinforcing alliances through openness and multilateralism, specifically by integrating “environmental and climate priorities, labor protections, and intellectual property rights with unencumbered flows of goods and services, thereby providing economic benefits to both source and destination countries.” The aim of this approach is to restructure the incentives that China and other nonparticipant countries face if they wish to maintain functional trade ties to the US’s network of allied partners. Rejoining the Trans-Pacific Partnership (TPP), which became the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) when the US withdrew under Trump, or reverse engineering it through bilateral and multilateral agreements, Lissner and Rapp-Hooper suggest, would be a good first step. 

Current USTR Katherine Tai frequently clarifies how the Biden administration has adapted this openness and multilateralism strategy, focusing specifically on workers’ interests. As Tai explains, in “all of our negotiations in the Indo-Pacific, with Kenya, with Taiwan—whether they are developed, advanced economies like Europe and the UK and Japan or developing countries—we continue to put [workers] at the center.” This approach to trade policy, Tai says, creates “economic opportunity for our workers” but also “allows our partners […] to build their middle classes alongside us.” This approach “is one of the most critical elements” of Biden-Harris trade policy. It aims to re-establish the US’s credibility by positioning it as a leader in a global economy whose benefits are distributed more equally among countries and people—that builds “middle and working classes not at the expense of others but together.” 

On Standards and Fairness

Although this openness and multilateralism strategy, as well as its rhetoric around all workers (versus only US workers), differs starkly from Lighthizer’s or Trump’s, its general theory that standards are a part of the solution is similar. “The free-trade regime,” Lissner and Rapp-Hooper argue, has “allowed more closed societies to exploit openness to their advantage—and to the detriment of workers worldwide.” An Open World’s solution to this problem includes “resetting the rules of international trade by modernizing the WTO, affirmatively shaping the global economic environment through high-standards multilateral free-trade agreements, and protecting sensitive technologies and industries that may otherwise be exploited,” and acknowledges that “the primary antagonist to trade openness is China.” Along with domestic policy reforms that address the distributional consequences of free trade, such as worker displacement, these steps are meant to constitute one pillar of the Biden and Harris administrations’ trade strategy.

As Biden’s USTR, Tai has worked to build this pillar, leading standards-anchored negotiations towards agreements such as the Indo-Pacific Economic Framework for Prosperity, the US-Kenya Strategic Trade and Investment Partnership, and the Joint Declaration Against Trade-Related Economic Coercion and Non-Market Policies and Practices. Contextualizing this work, Tai explains that the US is in competition with “systems that work on a different set of economic logic” and distort the global economy through “economic coercion and bullying,” choking supply chains in response to “political decisions that they don’t like.” Although she does not clarify whether these observations apply to China or Lighthizerism—and they could apply to either—Tai does emphasize that diversifying and de-risking supply chains while promoting multilateral, sustainable, “pro-worker,” and “pro-democracy” trade paradigms is at the center of Biden’s, and likely Harris’s, trade strategy. “We need to be fundamentally playing a different game,” she concludes. “We have to be much more conscious about what is at stake and what are the values in our economy and in our society that we need to safeguard because they are under threat.”

Fairness, under Harris, would revolve around the kinds of standards outlined above, determined jointly among the US and allied trading partners. As Tai puts it, “we should not have to apologize for requiring others to meet our standards in order to access our market… If we forget that, we shortchange our people, we shortchange the economic opportunity that our people deserve.”     Noting the challenges that NAFTA has imposed on US auto workers, farmers, and other workers displaced by import competition, including in the form of offshoring, Tai suggests that the agreement’s bipartisan transformation into USMCA, and particularly the creation of the facility-specific Rapid-Response Labor Mechanism (RRM), which offers expedited enforcement of free association and collective bargaining rights in offending workplaces (so far used exclusively by the US against Mexican firms), represents a trade strategy that “supports livelihoods, prospects, and opportunities for American workers.”

On Domestic Policy Approaches to International Trade

Biden’s, and likely Harris’s, domestic approach to trade goes beyond the scrutiny of global value chains and accompanying enforcement mechanisms describe above, and even beyond the industrial subsidies that the Harris and Trump administrations would broadly agree on. For example, at the individual level, Harris is likely to support Trade Adjustment Assistance (TAA), which provides money and re-training for workers displaced by offshoring. Lissner and Rapp-Hooper describe an industrial policy that positions American enterprise to compete not only through international multi-state alliances, but also through domestic and international public-private partnerships. As China expands its global footprint through worldwide investment, including in USMCA countries, the US can “prevent Beijing from creating closed spheres of influence” by working directly with the private sector, both in the US and in allied countries, to “provide selective alternatives,” especially in areas with implications for national security and where investment could result in closed sphere, such as digital infrastructure. Lissner and Rapp-Hooper suggest using the Export-Import Bank to invest in transnational public-private coalitions; developing metrics to measure and help enforce anti-corruption, digital governance, labor, environmental, and other standards through multilateral mechanisms (such as the RRM, perhaps); and provide assistance to trading partners to create transparent development institutions. By giving partner countries “a choice among infrastructure development options,” Lissner and Rapp-Hooper propose, the US can ensure that “Chinese standards do not prevail by default.”

This strategy has manifested itself in the form of programs such as CHIPS, the Inflation Reduction Act (IRA), and the Infrastructure Investment and Jobs Act. These bipartisan initiatives appear to reflect An Open World’s vision, which connects domestic policy to its grand strategy of openness and multilateralism: “The next administration must strategically leverage areas of enduring consensus [across the political spectrum]… and craft policy initiatives that create enduring alignments between the private sector and openness objectives, thereby protecting core components of the strategy from partisan erraticism.” Lissner and Rapp-Hooper, in 2020, proposed major investment in technological research and development, as well as regulatory changes to create opportunities for public-private collaboration in cybersecurity. They also proposed using “a blend of carrots and sticks” to seek buy-in from non-tech sectors in the international openness agenda—particularly financial services, energy, and infrastructure—suggesting that where “these industries’ incentives are authentically aligned with openness objectives, the strategy will become self-sustaining regardless of who controls the White House.” President Biden did, in fact, move in this strategic direction, launching numerous initiatives to strengthen US supply chains, including the Supply Chain Data and Analytics Summit, to strengthen critical mineral supply chains, the Council on Supply Chain Resilience, USMCA’S trilateral Sub-Committee on Emergency Response, the Americas Partnership for Economic Prosperity, the North American Leaders Summit, the Partnership for Global Infrastructure and Investment, the Mineral Security Partnership, and the International Technology Security and Innovation Fund, and many others—all focused on critical minerals, semiconductors, clean energy, medical supplies, and other areas critical to competing through standard-setting multilateral alliances.

On China and USMCA

Lissner and Rapp-Hooper clearly distinguish their approach towards competition with China from Lighthizer’s. Whereas Lighthizer has expressed admiration towards China’s ability to enact a “mercantilist economic policy” from the top down, An Open World urges future administrations to  “embrace the fact that the United States’ approach will not resemble China’s” and refrain from attempting to replicate a Chinese “model of state-society relations.” Instead, through carrots, sticks, public-private partnerships, openness, and multilateral alliances, the US should  “harness its tremendous national assets [to maintain] the technological edge, global market share, and influence over technology standard setting necessary to compete with China and preserve an open international system.” Accordingly, Harris’s approach, like Biden’s, will compete with China not by attempting to shut them out of national markets, but by building stronger alternatives.

Mexico is not only one of the US’s most important trading partners, it is also a key player in the US’s strategy of competition with China. Since 2018, beginning under President Peña Nieto and continuing under President López Obrador, China has invested approximately two billion dollars into Mexico, and announced 12 billion dollars more. Chinese state-owned enterprises have helped to build critical infrastructure projects such as the Tren Maya and metro systems in both Mexico City and Monterrey. Chinese companies have sought to join “nearshoring” efforts, building factories in industrial parks in northern Mexico, largely to produce goods for export to the US. This pattern will continue under Mexico’s newly elected President Claudia Sheinbaum, whose development plan includes the creation of more than 100 industrial parks to encourage domestic and foreign investment. Notably, Sheinbaum’s plan explicitly states that a key challenge for North American trading partners is to leverage their economic integration to substitute Asian imports with regional production using local inputs—and to that end, like Lissner and Rapp-Hooper, Sheinbaum proposes that Mexico require that new investments satisfy minimum standards, including in the areas of development strategy, industrial policy, labor rights, and sustainability.

China’s two- or even 14-billion dollar investment in Mexico is dwarfed by the US’s 207 billion, bolstered by a long history of interdependence and substantially enshrined in formal arrangements such as USMCA. The policy agenda that Harris will inherit is not primarily concerned with the value of Chinese investment in Mexico, or the balance of trade between partners, but with the sectors in which China invests. For instance, Chinese multinational digital communications technology company Huawei, a primary target of US sanctions because of its connection to mass surveillance and Xinjiang internment camps, is a trusted vendor in Mexican billionaire Carlos Slim’s telecommunications network, which—in collaboration with the Mexican government—has expanded 4G and 5G networks in Mexico’s major cities, establishing more than 30,000 Huawei Wi-Fi hotspots. Regarding nearshoring, Chinese firms accounted for 40% of investment in Mexico and 80% of occupied space in industrial parks in 2022, largely in the electric vehicle sector. Such investment carries strategic and national security risks from both Trump’s and Harris’s perspective, and perhaps from Sheinbaum’s. Cybersecurity, intellectual property rights, and development strategy—not to mention fentanyl distribution through Chinese and Mexican criminal networks—will be key challenges during the USMCA joint review, likely generating considerable uncertainty for the private sector. 

The difference between Trump’s insistence on decoupling and Harris’s focus on derisking is critically important in the US-Mexico relationship. Derisking by, for instance (as President Sheinbaum has herself proposed), conditioning investment on a set of minimum standards would involve multilateral collaboration. In North America, that could entail building regional supply chains that protect national security interests. For Lissner and Rapp-Hooper, this collaboration need not exclude China, especially where there are shared interests: “[A]s the United states seeks to keep Asia open amid China’s rise, climate- and health-related projects should be part of a mixed cooperative-competitive strategy… [T]hese projects present obvious opportunities to work with allies; they may also allow for collaboration with Beijing.” An Open World observes that, as a world leader, China has an incentive to contribute to joint efforts to address shared problems. By setting and enforcing the same standards, domestically and under USMCA, North American trading partners may therefore be able to “galvanize new forms of cooperation, even among competitors.”

USMCA Challenges

Ostensibly under the Lissner and Rapp-Hooper framework that Biden and Harris have adhered to, the US’s key task—in relevant part with regard to USMCA—is to offer allies and potential allies a viable alternative to deeper integration with China. Lissner and Rapp-Hooper acknowledge that, although “economic integration through trade agreements” such as USMCA indicate that the US will retain its influence in the Americas, “the region will not be an exclusive American zone.” The appropriate strategy under such circumstances, they suggest, should rely primarily on diplomatic and economic tools to “expand trade ties, […] promote good governance through investment, cooperatively manage shared challenges like migration, and lead development initiatives […] in areas like 5G.” The extent to which Sheinbaum’s and Harris’s domestic policies converge will depend on the depth and quality of international collaboration, including with regard to the USMCA joint review in 2026. Besides the shared challenges mentioned above, there is some significant baggage in North American trade relationships that will likely influence the joint review.

Decoupling from China is not on the table for Mexico—one of numerous indications that it is not truly in the cards for the US, either. Besides the sunset provision noted in the first part of this series, USMCA contains another atypical mechanism, Article 32.10, that restricts the parties’ entry into free trade agreements with non-market economies, meaning principally China. Should any party violate Article 32.10, the other two parties could withdraw, forming a new bilateral agreement and leaving out the violator. Although the material impact of such an explicit provision is unclear, it might be up for discussion in 2026. For Sheinbaum’s part, her party’s public message regarding trade and development has been that Mexico will continue to strengthen trade relationships with China and other partners, including but not limited to the US and Canada, while focusing on issues of existential importance to the people of Mexico as the world heads into an era of exponential climate change. 

Water management, seldom considered a variable in international trade, happens to be a critical border issue and—although it is negotiated by the International Boundary Waters Commission, not the Trade Secretary—could enter political calculations during the USMCA joint review process. The 1944 United States-Mexico Treaty for Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande, which obligates Mexico to deliver a certain quantity of water that is dammed and stored in Mexico to the US over five-year cycles, is set to expire on October 25, 2025. Due to climate change-related drought, however, Mexico has had trouble delivering the agreed amount in recent cycles. Because the Mexican Constitution recognizes a human right to water, the government has a constitutional as well as a moral imperative to prioritize delivery to own population—at least this is how Sheinbaum appears to understand it. Sheinbaum has publicly expressed a desire to more closely align Mexico’s General Water Law with the Constitution, in particular to meet domestic agricultural and direct consumption needs. John Cornyn, Ted Cruz, and eight other representatives have asked the House and Senate Appropriations Subcommittees on State and Foreign Operations to support a 2025 appropriations bill withholding funds from Mexico until it delivers the agreed quantity of water—a confrontational approach that the Trump administration might favor. Harris is more likely to pursue Biden’s approach, which has attempted to reduce reliance on agreements such as the 1944 Water Treaty by investing heavily in water conservation in the western US, including in areas that depend on the Rio Grande. 

The difference in approaches seems to be less clear in other areas. In summer 2023, the Biden administration requested a dispute panel on Mexico’s decree earlier in the year banning the use of biotech corn in tortillas or dough and announcing its intention to gradually phase out its use in any product meant for human or animal consumption. The US claims that the decree violated Mexico’s obligations under USMCA Chapter 9, arguing primarily that Mexico cannot produce evidence that genetically modified corn poses any risk to human health. In response, Mexico produced a 264-page justification of its policies showing that its imports of corn from the US increased in 2024, despite the decree, and reasoning that it is the least restrictive possible method to achieve Mexico’s aims, which transcend concerns about genetic modification to include self-sufficiency in food production; mass exposure of Mexico’s land, water, and people to herbicides (glyphosate); and obligations to treaties with Indigenous communities, especially regarding the preservation of biodiversity and traditional economies in the birthplace of maize-based agriculture. USMCA Article 32.5 (Indigenous Peoples’ Rights), Chapter 24 (Environment), International Labor Convention 169, the UN Convention on Biological Diversity (and other United Nations conventions), national legislation, and the Mexican Constitution, all support these components of Mexico’s argument. Yet so far the Biden administration has vigorously opposed Mexico’s decree. Although Canada has joined the US in its current position, Harris would be joined by a reconfigured Canadian government before the USMCA joint review and might have an opportunity to reevaluate.

In the automotive sector—critical to US strategy around China, climate, energy, technology, and natural resources—Mexico and Canada recently prevailed over the US in defending the “roll-up” method before a USMCA panel, which allows manufacturers to count the full value of manufacturing inputs (most importantly core parts such as engines, transmissions, bodies, chassis, and batteries) meeting minimum regional value content (RVC) requirements as originating when they are subsequently incorporated into finished vehicles. US officials including USTR Katherine Tai, Treasury Secretary Janet Yellen, and the members of the House Select Committee on the Chinese Communist Party have expressed concern that the panel’s adverse ruling will give Chinese auto manufacturers a “back door” into the US market. In response, the US International Trade Commission (USITC) has initiated an investigation into the effects of the panel’s interpretation of USMCA’s automotive rules of origin, focusing especially on gross domestic product, employment, global competitiveness, technological progress, and commercial stability. USITC will hold a public hearing on October 8, 2024, collect post-hearing briefs and other written submissions until November 18, and transmit a final report on its findings to the President, House Ways and Means Committee, and Senate Finance Committee on July 1, 2025. This report is likely to have a strong influence on the US’s position on automotive manufacturing going into the USMCA joint review.

Finally, as a preview to part three of this series, USMCA’s Facility-Specific Rapid Response Mechanism (RRM) is certain to play a central role the joint review process—and perhaps even in trade negotiations with other countries around the world. The RRM is a jewel in the crown of the Biden administration’s worker-centered trade policy, used 27 times (as of September 2024) to address violations of workers’ rights, including by winning backpay and benefits, securing reinstatements, and ensuring free and fair elections by independent unions. The RRM allows any USMCA partner country to impose tariffs or other penalties on goods and services imported from facilities believed to have denied workers’ collective bargaining rights, and to suspend liquidation of duties temporarily while the matter is under investigation. This mechanism is only available where the targeted facility is in a “priority sector” producing goods or services that are traded among the parties or in competition in the other parties’ territory. Typically, if two parties agree that a facility has denied workers’ rights, they jointly pursue a “course of remediation” to correct the violation. In some cases, where the parties cannot arrive at such an agreement, one of them may request a panel of labor experts to mediate the dispute.

Despite what readers might expect from a trilateral agreement, the RRM is not truly reciprocal. USMCA does not create an RRM between the US and Canada. Instead, it contains two separately annexed bilateral RRMs, one between Mexico and the US and one between Mexico and Canada. Most strikingly, a footnote in USMCA’s labor chapter restricts Mexico’s use of the RRM exclusively to US and Canadian facilities that have already exhausted domestic administrative remedies and received adverse rulings. Accordingly, nearly all RRM cases were brought by the US against Mexico, mostly in the auto sector—although in 2024 the US expanded its scope, targeting facilities in the food production, steel production, mining, and telecommunications sectors. In May, an RRM panel found against the US in a labor dispute between Grupo México and Los Mineros, a union at the San Martín mine (containing copper, lead, silver, and zinc) in Zacatecas, largely on jurisdictional grounds. Ambassador Tai issued a response to the panel’s ruling, affirming that the US remained firm in its commitment to the RRM and “steadfastly committed to using all the tools available under the USMCA to seek redress for the persistent problems” at the mine.

USMCA parties can initiate complaints under the RRM on their own, from the top down, or pursuant to petitions filed by aggrieved groups, from the bottom up. The latter path accounts for the majority of RRM cases so far. But following the adverse panel ruling, the US may choose to pursue other forms of state-to-state action. For example, it could suspend preferential treatment under USMCA Article 23.3 or 23.5, attempt to set favorable precedents by initiating strategic RRM cases from the top-down, or apply diplomatic leverage elsewhere. But there are other paths the US could try—paths that might avoid some of the baggage in North American trade relationships described above, easing tensions in particular between the US and Mexico as Mexico’s new government matures. With little room for doubt, these paths would be off-limits to a Trump administration. So far, it looks like Harris is likely to follow Biden’s approach—but because she has not clearly outlined any particular trade policy, the next part will explore some more interesting possibilities.