Upcoming USMCA review puts South Texas–Mexico trade at risk, negotiator warns

North America is entering an “extremely critical moment” ahead of the 2026 USMCA review, according to a former trade negotiator whose firm advises multinational manufacturers operating across the region.

That warning came from Mónica Lugo, a former negotiator of the USMCA and now director of institutional relations at Grupo Prodensa, a consulting firm that supports companies with site selection, expansion, and cross-border operations. As someone who helped negotiate the agreement, she warned that rising protectionism and new tariff threats risk destabilizing more than three decades of economic integration.

“A 30-year commercial relationship is at stake — one that has only proven, with concrete data, to be beneficial for all three countries,” Lugo told the Rio Grande Valley Business Journal. “When you bring protectionist policies like imposing tariffs, quotas, or managed trade, the only thing you’re doing is shooting yourself in the foot.”

A historic moment for North America

During her participation in a binational forum, Lugo emphasized that the region is experiencing a historic turning point shaped by technological transformations, supply-chain reconfiguration, and increasingly intense global competition.

“The most important thing is understanding that we need to be together. North America, as a region, needs to be stronger in order to face all the challenges we are seeing around the world,” she said.

Lugo said the USMCA remains the strongest tool for consolidating that integration and strengthening value chains in key sectors.

Deeply integrated value chains

Lugo stressed that regional competitiveness depends on shared production processes, especially in the automotive industry.

“A Ford vehicle crosses the border at least seven times between Mexico, Canada, and the United States,” she said about its manufacturing process. “We are no longer talking about a car produced in the United States; a car is produced in North America with components made in all three countries.”

Interrupting that flow, she noted, would have immediate consequences. 

“The only thing you do is make yourself less competitive — and therefore your main partners: Canada and Mexico,” she said. 

Beyond the automotive sector, she pointed to other integrated industries that could also be affected, including aerospace, medical devices, pharmaceuticals, advanced manufacturing, and electronics.

“When we sell a car in the world, we are selling a North American car. That is how we compete and how we can become stronger,” she said.

Tariffs: a direct blow to the consumer

Lugo questioned the political narrative that claims that tariffs do not affect U.S. consumers.

“Consumers pay the tariffs. Prices do not go down; on the contrary, they increase,” she said. She cited studies showing that since the imposition of tariffs during the Trump administration, “the U.S. consumer has paid more than $3,000 per person.”

She also argued that using tariffs to pressure Mexico and Canada in sectors such as electric vehicles, steel, or semiconductors will not resolve competition with China.

“China’s competitiveness is China’s problem, not Mexico’s,” she said. “You can’t stop competition by putting up barriers… competition is addressed by fostering innovation.”

Education, talent, and the region’s future

Lugo warned that North America must prepare to confront challenges already underway, including artificial intelligence and the global dispute over the semiconductor industry.

She called for greater educational alignment among the three countries.

“In Mexico, the most saturated college majors are law and accounting, which will eventually become obsolete,” she said. “We need to focus on engineering, technology, and the skills of the future.”

Lugo said Mexico has a unique demographic advantage — if it manages to prepare its workforce for the region’s needs. 

“The future is already here. We must prepare our youth for what is coming. More education and more access are needed,” she said. 

Public and private sectors: urgent collaboration

Lugo emphasized that no government can face current challenges alone and that greater coordination between businesses and authorities is essential.

“We need to collaborate more with the government to develop public policies, education, and trends aligned with the future. We are addressing urgent problems, but we must think about the next 10 or 20 years,” Lugo said. 

She highlighted regions like Asia and Europe, where long-term plans guide regional competitiveness.

Companies’ slow investments in industrial regions

Uncertainty is already affecting industrial areas like Reynosa, she said.

“There are companies shutting down, plants leaving, jobs being lost,” she warned. “Many [companies] that were about to invest have postponed their decision… too much uncertainty.”

With rising costs from tariffs and inflationary pressures, she anticipated an immediate impact.

“In January of next year, we’re going to see a lot of inflation,” Lugo warned.

‘A Pandora’s box’ in 2026

The greatest risk, she argued, is that a renegotiation could reopen the agreement entirely. 

“The moment a renegotiation is pursued, a Pandora’s box is opened, and all the balances we achieved in 2018 are undone,” the former USMC negotiator said. 

She said reopening the agreement would allow each country to attempt to modify key rules, undermining the legal certainty required for long-term investments.

With the USMCA review approaching and the upcoming testimony of the U.S. trade representative before Congress, Lugo urged Mexico and Canada to present a united front.

“It makes no sense for the United States to impose tariffs on Mexico and Canada… we are a region, and together we are more competitive. Period,” she said. “Together we are better.”