The starting point for understanding the current moment in the U.S.–Mexico economic relationship is trade. Over the past three decades, bilateral exports have expanded at a pace that few regional partnerships in the world can match. Supply chains have deepened, production processes have been fragmented across borders, and firms now operate through integrated binational networks rather than national structures. What once appeared as a conventional exchange of goods has become a system of co-production. 

This expansion in trade, however, contrasts sharply with the evolution of output. While cross-border commerce has accelerated, the gross domestic product (GDP) growth in both countries has been modest. In per capita terms, the picture is more sobering: income growth has slowed, and in several periods it has stagnated. Even measured in real terms, the convergence that many expected from trade integration has not materialized at the scale or speed initially anticipated. Let’s not forget that GDP is just another name for Income. 

The comparison becomes even more revealing when Mexico’s per capita income is expressed as a share of the United States’ per capita income. Integration delivered stability and scale, but not the productivity acceleration required to close the gap. The GDP per capita of both Mexico and Canada, relative to the US’ has declined in the past decade.  

The composition of growth helps explain why. In both the Unites States and Mexico, private consumption has been the principal driver of economic expansion. Household spending, supported at different times by credit, remittances, fiscal transfers, or asset cycles, has compensated for weak investment and limited productivity gains.

This has deep systemic and philosophical underpinnings, since Reagan, the economic success metric is based on how much the average American can buy, not necessarily how much it produces. We see this over and over again, manifesting each election when the old phrase “it’s the economy, stupid” comes back to life. The American economic system sees its citizens first as consumers, rather than producers. This might be in the process of changing.  

Consumption has allowed growth to continue, but it has not transformed the productive structure. It is a mechanism that sustains activity, not one that raises long-term capacity. 

This is visible in industrial production, which is stalling both in the United States and Mexico. In the case of the United States, several elements help explain the virtual stagnation, from financialization that has not fed the capital-intensive advanced manufacturing, to offshoring and a corporate strategy based on global supply chains. And probably a lack of strategic industrial coordination. In Mexico’s case, industrial trade took place essentially in a maquiladora assembly process, with no domestic supplier development, slow technology advancement, uncertain energy policy, a lack of investment and an important infrastructure gap.

Manufacturing output in both economies has grown far more slowly than trade flows. The region has traded more, but production has grown proportionally slower. Employment has expanded in some sectors and regions, yet real wages have not followed suit, and purchasing power has often lagged behind. The benefits of integration have been unevenly distributed geographically and socially. 

None of this means that the USMCA framework has failed. On the contrary, it has been remarkably effective in what it was designed to do. It created legal certainty for trade and investment. It placed production and exchange under a rules-based system. It allowed firms to refine logistics, coordinate across borders, and build long-term productive partnerships. It contributed to formal employment in Mexico and strengthened the operational integration of the North American industry. It guarantees rules but not an industrial upgrading. 

It was never conceived as an industrialization strategy. 

Trade agreements reduce barriers and provide certainty. They create the conditions for investment to take place. They are a necessary foundation for integration. Yet they do not, by themselves, generate productivity growth, technological upgrading, or sustained income convergence. 

This is the central paradox revealed by the data: North America has built one of the most sophisticated cross-border production systems in the world, and yet both countries face weak long-term growth, limited industrial expansion, stagnant manufacturing output in particular, and persistent income challenges.

The question, therefore, is not whether the USMCA should be preserved. It must be. Trade is a necessary condition but not a sufficient one. The stability it provides is the platform on which everything else rests. The real question is what comes next.

A coordinated North American strategy would shift the focus from trade volume to regional productivity. It would aim to expand industrial capacity, not merely to facilitate exchange. It would connect infrastructure, energy systems, innovation networks, and labor markets into a single framework designed to raise output per individual workers and firms.

Such a strategy would also address one of the central political challenges facing both countries: the perception that the gains from integration have not reached large segments of the population. When growth is driven primarily by consumption and when industrial output stagnates, the benefits are concentrated in specific sectors and regions. A productivity-based agenda, by contrast, has the potential to extend those gains geographically and socially. What is missing is a common framework that treats elements such as talent, energy, infrastructure, critical minerals, security, intellectual property, agriculture, and demographics as parts of a single development strategy.

This is not a call for a supranational industrial policy. It is a recognition that national strategies, if designed in isolation, will underperform relative to what the region could achieve collectively. Coordination in strategic sectors, alignment of regulatory frameworks that affect investment and production, and joint efforts to raise productivity would transform an already integrated market into a genuine engine of growth.

Trade integration has been successful in creating a platform. That platform has delivered stability, scale and efficiency. But stability is not growth and efficiency is not convergence.

After three decades of modest growth, even under a strengthened trade framework, the absence of a coordinated binational industrial strategy, risks leaving us once again with a stagnant industrial base and persistently weak real wage growth in the years ahead.

The next stage requires moving from integration through trade to integration through production.