NAFTA / USMCA

The first trade agreement between two rich countries and a developing one, which became the most politically contested treaty in North America. NAFTA took effect on 1 January 1994, eliminating most tariffs between the United States, Canada and Mexico over fifteen years and creating what was then the largest free trade area in the world. Its significance was less about tariffs, which were already low between the United States and Canada, than about integrating Mexico into North American manufacturing - and the deep supply chains that resulted, particularly in cars, where components cross borders repeatedly before a vehicle is finished. Trade among the three countries grew several-fold. The effects were uneven, which is why the argument never settled: Mexican manufacturing and exports expanded while Mexican maize farmers faced subsidised American grain, and American manufacturing regions lost employment that was concentrated enough to reshape politics. The Zapatista rising in Chiapas began the day the agreement entered into force, timed deliberately. The agreement was renegotiated and replaced in 2020 by the USMCA, which raised the North American content required for cars, added labour provisions enforceable against individual factories, and included a clause requiring the parties to review it periodically. The three economies remain deeply integrated. Mexico became the United States' largest trading partner in 2023. The agreement was signed in 1992 and took effect in January 1994. It covered the United States, Canada and Mexico. The three countries hold around 510 million people. The USMCA replaced it on 1 July 2020. Its review clause is scheduled to operate every six years.

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