TO: U.S. Senate Committee on Finance
FROM: Bryan Riley, National Taxpayers Union
122 C St NW Suite 700
Washington, DC 20001
703-683-5700
RE: Hearing: The U.S.-Mexico-Canada Agreement: Evaluating North American Competitiveness, February 12, 2025
Statement for the Record
DATE: February 12, 2025
I am Bryan Riley, Director of the Free Trade Initiative at National Taxpayers Union (NTU). Founded in 1969, NTU is the oldest taxpayer group in the United States. We serve as the “Voice of America’s Taxpayers” and strive to represent their best interests before governments at all levels. We appreciate the opportunity to submit the following statement for the record to the Finance Committee regarding the U.S.-Mexico-Canada Agreement (USMCA).
Reciprocal, low-tariff trade agreements like USMCA strengthen our competitiveness. The six-year joint review of USMCA provides an opportunity to determine whether USMCA should be extended, and NTU believes the answer is clearly “yes.”
The review also provides an opportunity to determine how trade agreements like USMCA benefit U.S. competitiveness and also how they can be improved in the future. While this process is intended to be a review of USMCA and not a renegotiation, it does provide an opportunity to identify areas where the agreement could be improved.
Including both Canada and Mexico as USMCA partners has maximized the benefits of North American supply chains. The key benefits of USMCA result from the agreement’s reciprocal zero-tariff trade provisions between the three countries. NTU encourages using this review period to identify areas where each country deviates from zero-tariff reciprocity. The United States should lead efforts to eliminate such exceptions to the maximum practical extent.
The United States should also pursue opportunities to improve USMCA by identifying opportunities to modernize it. For example, USMCA could be enhanced by specifying that governments may not impose digital services taxes that discriminate against U.S. providers. This review also provides an opportunity to consider ways USMCA could better encourage innovative new technologies including artificial intelligence, lifesaving medical and pharmaceutical goods, and semiconductor chips.1
The review should take note of the fact that the national security exception in USMCA is weak and could be improved. Currently, Canada or Mexico could hypothetically restrict imports of U.S. genetically modified corn, dairy products, or any other good or service simply by claiming a national security exception. That’s because, under Article 32.2 of USMCA, any country can deviate from its USMCA obligations and apply any restriction “that it considers necessary” for its essential security interests. This loophole allows countries to claim exceptions for virtually any product and effectively makes all USMCA provisions optional.2
NTU further encourages using this review to evaluate USMCA provisions that do not directly pertain to trade and investment. Trade agreements should not be broad-based charters that subject U.S. domestic policies to foreign review. The focus should be on removing barriers to trade and investment, not creating new roadblocks. For example, USMCA includes provisions relating to minimum wage laws, sexual orientation and gender identity, and sustainable development. These are domestic issues, and it would be helpful to evaluate whether they have improved the operation of USMCA or detracted from its benefits.
The North American Free Trade Agreement (NAFTA) and USMCA have had significant impacts on motor vehicle trade and production. In 2019, the U.S. International Trade Commission (USITC) projected that changes to NAFTA’s rules of origin would increase car and truck prices in the United States.3 A July 2025 USITC report included a survey of 22 manufacturers, which found that most of the sourcing changes required to meet USMCA’s rules of origin increased production costs.4 This review should evaluate these provisions of USMCA, given the importance of the automotive industry to the U.S. economy and the benefits of providing more affordable transportation for U.S. households.
An increasing percentage of imports from Canada and Mexico are classified as compliant with USMCA. But qualifying goods as USMCA-compliant may present a challenge for small businesses that lack the resources and legal expertise of larger corporations. NTU encourages the six-year review process to examine ways to streamline USMCA paperwork burdens so small businesses can take full advantage of its benefits.
Finally, following completion of the six-year USMCA review, NTU suggests adding a formal accession process to allow other countries to join the agreement. The United States risks being left behind as the European Union pursues a trade agreement with Mercosur, China joins an expanded Association of Southeast Asian Nations (ASEAN) pact, and the United Kingdom joins the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.5 Creating a strong USMCA that other countries want to join would allow the United States to lead, not stand on the sidelines.
Good trade agreements like USMCA further the expansion of mutually beneficial trade under a framework of low tariffs, low subsidies, and low non-tariff barriers. Such agreements reduce taxes for U.S. households, create new export opportunities, and boost our economic strength. NTU looks forward to continuing improvements to U.S. and North American competitiveness under USMCA.
1 Paul Triolo, “Building a long-term North American semiconductor ecosystem,” Brookings (March 5 2025), available at https://www.brookings.edu/articles/building-a-long-term-north-american-semiconductor-ecosystem/.
2 Bryan Riley, “Biden Administration Unleashes the Use of ‘Anything Under Sun’ to Restrict Exports of American-Made Goods and Services,” Publications, National Taxpayers Union (January 6, 2023), https://www.ntu.org/publications/detail/biden-administration-unleashes-the-use-of-anything-under-sun-to-restrict-exports-of-american-made-goods-and-services.
3 U.S. International Trade Commission, U.S.-Mexico-Canada Trade Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors (Publication No. 4889, Investigation No. TPA 105-003, April 2019) (Washington, DC: USITC), https://www.usitc.gov/publications/332/pub4889.pdf.
4 U.S. International Trade Commission, USMCA Automotive Rules of Origin: Economic Impact and Operation, 2025 Report (Publication No. 5642, Investigation No. 332-600, July 2025, corrected August 2025) (Washington, DC: USITC), https://www.usitc.gov/publications/332/pub5642.pdf.
5 “EU-Mercosur Deal: Latin America Commission Trade Deal Brazil Uruguay,” Politico Europe, October 27, 2025, https://www.politico.eu/article/eu-mercosur-deal-latin-america-commission-trade-deal-brazil-uruguay/; The Associated Press, “China and ASEAN Sign Expanded Free Trade Pact,” AP News, August 3, 2023 https://apnews.com/article/asean-china-free-trade-trump-8a9d0f1ed5e87ebba4b5798275cd3605; and Department for Business and Trade and Department for International Trade, “The UK and the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP),” GOV.UK, published March 31, 2023 (last updated 1 August 2025), https://www.gov.uk/government/collections/the-uk-and-the-comprehensive-and-progressive-agreement-for-trans-pacific-partnershipcptpp.