Katie Hobbs Warns of Economic Risks if USMCA Trade Deal Isn't Renewed

Governor Katie Hobbs (D-AZ) presented findings from an economic study examining Arizona's trade relationships with Mexico and Canada, which analyzed business perspectives on the United States-Mexico-Canada Agreement (USMCA) ahead of its scheduled review this year.

The report was produced by Arizona State University's Seidman Research Institute, commissioned by the governor last summer.

Researchers interviewed and surveyed business leaders across various industries, including manufacturing, agriculture, construction, mining, and transportation, to assess the agreement's impact on Arizona's economy.

"Protecting and strengthening our trade partnerships is essential to our emergence as a leading global economic hub and continuing to grow and create jobs," Gov. Hobbs stated.

"The USMCA renewal process is an opportunity to reaffirm our commitment to a vision of North America that is competitive and resilient and supports the prosperity of Arizona businesses and families. The insights presented in this report will help ensure that this year's trade agreement reflects the needs of Arizona's workers and businesses," she continued.

Moreover, Mexico ranks as Arizona's top trading partner, followed by Canada. The study aimed to gather Arizona-specific data on cross-border trade and investment to inform policy decisions during the agreement's joint review process.

Arizona Businesses

According to the report, surveyed Arizona businesses view the agreement as beneficial for cost efficiency and supply chain management.

Over 85 percent of participants indicated Arizona could experience negative impacts if the agreement isn't renewed, including potential trade disruptions, increased costs for businesses and consumers, and possible job losses in industries reliant on cross-border supply chains with Mexico.

The study also identified potential enhancements to the agreement, such as reintroducing the Certificate of Origin, ensuring uniform application of labor and health standards across all three countries, prioritizing improvements to border infrastructure, and expanding cooperation in areas such as critical minerals and pharmaceuticals.

The report follows Hobbs' October diplomatic trip to Mexico City with the Arizona-Mexico Commission and the recent opening of Arizona's first Canadian trade office.

The trade agreement is scheduled for a joint review in July 2026, when the three countries will evaluate whether to continue, modify, or replace it. By releasing this study now, Hobbs aims to ensure Arizona has a seat at the table during federal negotiations.

Through this approach, the governor is attempting to give Arizona's business community a direct voice in shaping trade policies that could significantly impact the state's economic future.