Industry insiders fear that the Trump administration’s concerns that Canada and Mexico are not treating the United States fairly in certain areas could complicate the renewal process.

“We’ve got to stay in this relationship and work on it, not be threatening it with a divorce,” says Patrick Lozada, Senior Director of Global Policy at the National Electrical Manufacturers Association.

While acknowledging there are legitimate issues that need to be addressed during the upcoming USMCA review, he argues that manufacturers still need the long-term certainty and integrated North American supply chains that the agreement provides. 

The agreement lays down rules for how components qualify to move across borders duty-free. Lozada says that structure has helped manufacturers deepen investments across North America.

NEMA is urging the three governments to renew the agreement for another 16 years, while still using existing mechanisms to resolve disputes and update portions of the agreement.

“A long-term renewal would not mean a static agreement,” Lozada says. “But what it would do is provide a sense of direction and certainty for manufacturers.”

That certainty is especially important for electrical manufacturers because the sector relies on a deeply integrated North American value chain.

“USMCA has allowed us to link design, engineering, manufacturing, assembly, testing, certification and services between all three countries,” Lozada says.

He says that integration has also helped the industry reduce reliance on China.

“Since 2018, China’s market share of electrical industry imports to the United States has decreased by 49%,” Lozada says.

Electrical manufacturing is also becoming increasingly important as AI, data centers, automation and advanced manufacturing expand.

“Electrical components comprise approximately one-third of the total spend to build a typical AI data center,” Lozada says. They also represent about 10% of the total spend for a new U.S. manufacturing facility.

NEMA projects U.S. electricity demand will increase by 55% by 2050, with data centers as a major driver. Lozada says AI data centers alone are expected to increase their share of energy demand by 300% over the next 10 years.

“We’ve got to have a grid that keeps pace with the incredible change in demand,” Lozada says.

Trade uncertainty, however, can complicate those investments. Lozada says changing tariff levels are especially difficult for manufacturers planning long-term production.

“If one day you’re paying 0% under a trade agreement, and then the next day you’re facing a 25% tax, and then the next day you’re facing a 10% tax, that is kryptonite for long-term certainty for manufacturers,” he says.

Lozada says NEMA also sees the USMCA review as an opportunity to resolve standards and regulatory issues, especially in Mexico. He says Mexico has not updated its electrical code since 2012, leaving it three editions behind the U.S. and Canada.

“Nobody supports an old electrical code,” Lozada says. “Nobody should support having standards that are out of date.”

If USMCA remains in limbo after the review, Lozada expects manufacturers and investors may interpret continued negotiations as manageable in the near term, but insufficient for long-term planning.

Certainty, Lozada says, is necessary for manufacturers considering new production capacity, new lines or new facilities.

“Manufacturers want to see certainty around what they’re going to pay,” Lozada says. “What they’re going to pay in terms of tariffs and taxes on their inputs, and then what markets they’re going to be able to access.”

NEMA is also advocating for a tariff incentive framework that would provide tariff relief or rebates for companies investing in U.S. manufacturing.

“If you’re investing in America, you’re bringing manufacturing back home, let’s get a discount off of those tariffs,” Lozada says.

According to Lozada, the framework could help advance U.S. manufacturing investment while managing costs for manufacturers and consumers.