Arizona Governor Katie Hobbs expressed concerns over the state of North American free trade negotiations at a Monday panel in Tucson.
If the United States, Mexico and Canada fail to renew the USMCA free trade agreement by July 1, the three countries would enter annual negotiations until the deal expires in 2036. The USMCA was signed in 2018 as a replacement for the North American Free Trade Agreement, or NAFTA.
“It was disheartening to hear from this administration, the administration that first put the USMCA in place, that not only would tariffs be a component of any deal moving forward, but also that they plan to skirt any congressional review,” Hobbs said.
According to governor’s office spokesperson Christian Slater, Hobbs was referring to private comments made during a meeting with Ambassador Jeff Goettman of the U.S. Trade Representative’s office.
The U.S. Trade Representative’s office did not immediately respond to a request for confirmation of Goettman’s comments.
“We need to figure out if the United States, Canada and Mexico will move forward in competition with each other or as a united trade bloc that will compete against the rest of the world,” Hobbs said.
In recent weeks, American and Mexican officials have said that the free trade deal is unlikely to be renewed before July 1. Since returning to office, President Donald Trump has levied tariffs against Canadian and Mexican imports in spite of the deal, though he later exempted goods covered by USMCA, a majority of those countries’ exports to the U.S.
Canada and Mexico have strengthened their trade ties with each other since those actions.
“To me, it’s clear that the path forward is to build stronger partnerships with our allies, not create uncertainty that weakens supply chains and raises costs,” Hobbs said.
She said the fate of the USMCA will be intimately felt in southern Arizona.
“This is a decision that affects jobs in Tucson, farms in Yuma, businesses in Nogales and families across our entire state,” she said.
Mexico is, by far, Arizona’s largest export market and Canada is a major source of foreign investment in Arizona, according to the Office of the U.S. Trade Representative.
The panel event was hosted by Tucson’s business chamber inside the local facility of Canadian aircraft manufacturer Bombardier. The company’s Senior Vice President of Strategy and M&A, Sandra Hodgkinson, said the USMCA makes long-term planning easier.
“In aerospace and defense, we plan long, long ahead on how we’re going to build our aircraft and how we’re going to participate in that ecosystem,” she said. “And you have to have certainty in trade to be able to do that.”
The stakes of trade uncertainty are higher for handlers of perishable products, said Georgina Felix, the Director of Operations & Foreign Affairs for the Fresh Produce Association of the Americas.
“In the best of cases, you’ve made it more expensive. In the worst of cases, the produce is no longer sellable,” she said.
Panelists were not without criticism for the current USMCA agreement. Giovanni Garcin, the president of Micromex, a company that helps U.S. manufacturers build facilities in northern Mexico, said USMCA legal requirements are often difficult for smaller businesses to navigate and encouraged their simplification.
The U.S. Trade Representative, Jamieson Greer, has called for stronger “rules of origin” in a renegotiated USMCA agreement, which determine how many components of USMCA-covered goods, such as cars, actually originate in North America.
