The Paradox of Measuring Success
When President Trump signed the United States-Mexico-Canada Agreement in January 2020, he declared it “the most important trade deal ever made.” Three years later, when President Biden’s trade representative Katherine Tai testified before Congress about USMCA’s performance, she pointed to increased agricultural exports and strengthened labor protections as proof of its success. Both administrations claimed victory using the same agreement but completely different metrics. This contradiction shows the fundamental problem with how we evaluate international trade deals: the outcomes politicians promise rarely match the economic realities that actually unfold.
The challenge isn’t that trade agreements fail to produce measurable effects. The North American Free Trade Agreement, USMCA’s predecessor, generated extensive economic data over its 26-year lifespan. Manufacturing employment in Mexico increased by approximately 2 million jobs between 1994 and 2018, while U.S. agricultural exports to Mexico grew from $3.6 billion to $19.3 billion. These numbers are real and meaningful. The problem is the causal chains politicians draw between specific trade provisions and broader economic outcomes. Economic research consistently shows these connections to be far more complex and messy than campaign rhetoric suggests.
Take the steel industry, which became a focal point during USMCA negotiations. Trump’s team argued that stricter “Buy American” provisions for automobiles would revitalize American steel production. The agreement requires 70 percent of automakers’ steel and aluminum to come from North America, up from NAFTA’s requirement of 62.5 percent. Yet U.S. steel production in 2023 remained essentially flat compared to 2019 levels, while steel prices increased by roughly 40 percent during the same period. The policy achieved its stated goal of reducing Chinese steel imports, but the broader economic effects rippled through supply chains in ways that defied simple cause-and-effect narratives.
The Labor Standards Mirage
Labor provisions in modern trade agreements present perhaps the starkest example of the gap between political promises and economic reality. USMCA includes unprecedented enforcement mechanisms for worker rights, including facility-specific investigations and trade sanctions for labor violations. The agreement’s supporters pointed to Mexico’s constitutional reforms strengthening collective bargaining rights as evidence that trade deals could finally address the “race to the bottom” in manufacturing wages.
The empirical record tells a more complicated story. Independent monitoring by the AFL-CIO documented 47 cases of worker intimidation at Mexican facilities between 2020 and 2023, leading to formal complaints under USMCA’s Rapid Response Mechanism. In several high-profile cases, including disputes at General Motors and Tridonex facilities, U.S. trade officials successfully pressured Mexican authorities to hold new union elections. These interventions were genuine victories for worker organizing rights.
But aggregate wage data shows the limitations of these enforcement mechanisms. Average manufacturing wages in Mexico increased by approximately 15 percent in nominal terms between 2020 and 2023. After adjusting for inflation and currency fluctuations, real wages remained largely stagnant. The structural factors that drive wage differentials between countries — productivity levels, infrastructure quality, and educational systems — operate on timescales that dwarf the political cycles driving trade negotiations. Labor standards can prevent the worst abuses, but they cannot overcome fundamental economic geography.
The Technology Transfer Trap
Perhaps nowhere is the complexity of trade agreement impacts more apparent than in technology sectors, where USMCA’s digital trade provisions broke significant new ground. The agreement prohibits governments from requiring technology companies to transfer source code or use local computing facilities. These provisions aimed squarely at Chinese practices that U.S. tech companies had long criticized. These rules were a clear victory for Silicon Valley interests and established precedents that shaped subsequent trade negotiations with other partners.
Yet the actual economic effects of these provisions illustrate why trade agreements often fail to deliver the outcomes their architects envision. U.S. technology exports to Mexico and Canada did increase following USMCA’s implementation, rising from $14.2 billion in 2019 to $18.7 billion in 2022. This growth coincided with the pandemic-driven acceleration of digital adoption across North America, making it nearly impossible to isolate the agreement’s specific contribution.
More importantly, the digital trade provisions that looked so significant in 2020 have been overtaken by geopolitical developments that trade negotiators could not have anticipated. The Biden administration’s export controls on semiconductor technology to China, implemented through unilateral sanctions rather than trade agreements, have had far greater impact on global technology flows than any provision in USMCA. The lesson isn’t that trade agreements are irrelevant, but that they operate within geopolitical contexts that frequently make their specific mechanisms secondary to broader strategic considerations.
Beyond the Binary of Success and Failure
The persistence of these evaluation problems suggests something deeper than mere political spin or analytical confusion. Trade agreements operate as both economic instruments and political symbols. They serve constituencies that measure success according to fundamentally different criteria. For multinational corporations, USMCA’s streamlined dispute resolution mechanisms and intellectual property protections create measurable value through reduced compliance costs and legal certainty. For labor unions, the agreement’s enforcement mechanisms provide leverage in specific organizing campaigns, even if they fail to transform wage structures across entire industries.
This multiplicity of purposes helps explain why trade agreements continue to attract political support despite their mixed economic record. The Trans-Pacific Partnership, which Trump withdrew from in 2017, has been largely replaced by the Indo-Pacific Economic Framework, which focuses on supply chain resilience and technology standards rather than traditional tariff reduction. The Biden administration’s approach acknowledges, albeit implicitly, that trade agreements work better as tools of geopolitical coordination than as engines of broad-based economic transformation.
The ultimate irony is that trade agreements may be most successful when they aim for modest, technical improvements rather than the sweeping economic transformations that politicians promise. USMCA’s pharmaceutical provisions, which extended patent protections for certain biologics, generated little political attention but created clear, measurable benefits for pharmaceutical companies operating across North American markets. These quiet successes rarely make headlines, but they demonstrate how trade agreements can create genuine economic value when freed from the burden of solving larger structural problems.
The Case for Intellectual Humility
Acknowledging the limitations of trade agreements doesn’t have to lead to policy nihilism. The alternative to overpromising isn’t abandoning trade policy altogether, but rather approaching it with the intellectual humility that complex systems demand. This means recognizing that trade agreements work best as tools of economic coordination rather than transformation, and that their effects unfold over timescales that make simple before-and-after comparisons meaningless.
The strongest argument for continuing to negotiate trade agreements doesn’t lie in their ability to deliver the specific outcomes politicians promise, but in their capacity to create frameworks for managing economic interdependence that would otherwise proceed without any institutional oversight whatsoever. In a world where supply chains span continents and digital services cross borders instantly, the choice isn’t between trade agreements and economic isolation, but between having imperfect institutions to manage these flows and having no institutions at all.
Perhaps the most honest assessment of USMCA’s legacy is that it successfully updated the institutional framework governing North American economic integration without dramatically altering the fundamental dynamics of that integration. That may sound like damning with faint praise. But in a political environment where both success and failure are routinely overstated, such modest achievements deserve recognition for what they actually accomplish rather than what their supporters wish they could deliver.