March 25, 2025 – During the Plastimagen Mexico international plastics industry exhibition held from March 11 to 13, Perc Pineda, Chief Economist of the American Plastics Industry Association, expressed optimism about the sustainability of North American free trade following the renegotiation of the United States-Mexico-Canada Agreement (USMCA) in 2026, despite recent fluctuations in U.S. trade policies.
Pineda highlighted that since the USMCA replaced the North American Free Trade Agreement (NAFTA) in 2018, it has brought tangible benefits to the plastics industries of the three countries. For instance, the USMCA’s increase in the “regional value content” requirement for automobile manufacturing from 62.5% to 75% has directly boosted the use of locally produced plastics in the automotive supply chain within North America. This move, according to Pineda, has not only fueled economic growth in Mexico, Canada, and the United States but also strengthened the interconnections among the plastics industries in these nations. Given that approximately one-third of the 33,000 parts required for a single vehicle are related to plastic products, the significance of regional trade liberalization for the manufacturing sector is evident.
According to Color Masterbatch Industry Network, Pineda candidly stated that the frequent adjustments to U.S. foreign trade policies, such as the suspension and reversal of tariffs on Mexican imports, have plunged businesses into “confusion” and hindered investment plans due to policy uncertainty. However, he advised the industry to focus on the “core intent” of policies rather than “superficial fluctuations.” Citing the Trump administration’s tariffs on China, Pineda noted that while some production capacity shifted to Southeast Asian countries like Vietnam, it did not result in the repatriation of manufacturing to North America. This indicates that trade barriers merely alter the geographical distribution of supply chains without genuinely protecting domestic industries.
Data from the National Plastics Industry Association of Mexico reveals that Mexico’s annual plastic exports to the United States amount to approximately $800 million. If the U.S. were to implement tariffs on Mexican goods, relevant enterprises would face significant risks. Pineda believes that the current policy window provides Mexican President Claudia Sheinbaum with room for negotiation, although the likelihood of the USMCA framework remaining intact is high. “We have witnessed a smooth transition from NAFTA to USMCA, and the foundation of regional free trade is difficult to shake,” Pineda remarked.
Industry analysts point out that as the 2026 USMCA renegotiation approaches, maintaining the stability of regional value chains will become a common need for the three countries. Finding a balance between the pressures of trade protectionism and the practical needs of the industry will be a critical challenge for policymakers.
Additionally, the NAFTA, which came into effect in 1994 and covered the United States, Canada, and Mexico, aimed to eliminate tariff barriers and promote regional trade liberalization, while also revising dispute settlement mechanisms. The gradual elimination of tariffs on chemicals facilitated the growth of trade in petrochemical raw materials, plastic resins, and products among the three countries. Leveraging its low-cost advantage, Mexico has undertaken some downstream plastic processing industries from the United States, forming a regional industrial chain division of labor.
In 2017, the Trump administration in the United States called for the renegotiation of NAFTA, citing “fair trade” as the reason. The following year, the three countries reached a new agreement framework and renamed it the USMCA. This agreement, with a validity period of 16 years and subject to review every six years (with the first review set for 2026), has promoted the localization of supply chains. U.S. shale gas resources have supported the expansion of ethylene and polyethylene production capacities, while Mexico has taken on mid- and downstream plastic processing. Moreover, the restructuring of the North American supply chain has driven the growth of trade in high-end packaging materials such as medical plastics, with Mexico providing relevant plastic packaging solutions.
Earlier this year, insiders revealed that U.S. President Trump used high tariffs on goods from Canada and Mexico to pressure the two countries into renegotiating the USMCA. Trump particularly focused on using tariff threats to compel automotive factories to relocate from Canada and Mexico back to the United States.