Trump 2.0 – Policy Trends to Watch for in the Americas

Overview  

The early announcement of several foreign policy nominees with experience in the Americas indicates the Western Hemisphere — and North America in particular — will be a priority for the incoming Trump administration. This may also increase uncertainty for policymakers and business leaders. The new administration is poised to take a more aggressive approach to trade policy and negotiation, with Trump linking countries’ willingness to cooperate on key issues like security, organized crime, and migration to commercial cooperation. 

China’s influence in the region will likely remain a critical focus for the administration. Other geopolitical dynamics, and U.S. alliances in the region, however, are likely to shift, with Trump and his officials likely to favor more right-leaning governments and demonstrate skepticism toward leftist governments. 

As in Trump’s first presidency, a high degree of volatility regarding policy decisions and their timing is expected. Businesses with significant supply chains in Mexico and Canada can expect a fluid policy environment ahead of, and during, the USMCA review in 2026. Close monitoring of relevant issues, proactive planning for risks, and thoughtful engagement with decision-makers will be essential to supporting business objectives. 

Trends to Watch in North America 

The North American trade partnership represents the largest free trade area in the world. Combined, Mexico and Canada account for 26% of total U.S. trade, reaching USD 1.8 trillion in goods and services in 2023. Despite these close trade ties, Trump has made clear that he is willing to threaten tariffs and border closures on short notice, with significant impacts for global companies.  

Tariffs: Trump has stated he will impose a 25% tariff on all goods from Mexico and Canada if the two governments do not address irregular migration, trafficking of illicit drugs, and other forms of criminality.  

• Mexico and Canada are likely to push for a negotiated approach. Canadian Prime Minister Justin Trudeau met with President-elect Trump at Mar-a-Lago to reiterate his desire to work collaboratively and avoid tariffs. Trump characterized the conversation as “productive.” However, Trudeau’s subsequent decision to step down as prime minister and head of the Liberal Party, with an expected non-confidence vote in the Canadian Parliament in late March that could result in elections in May, complicates Canada’s ability to negotiate. Similarly, Mexican President Claudia Sheinbaum issued a letter and held a phone call with Trump emphasizing Mexico’s contributions to reducing migration and combating fentanyl trafficking, including recent actions by the Mexican National Guard to seize contraband goods. 

• Neither Canada nor Mexico has said tariffs and other retaliatory measures are off the table. The ongoing threats of tariffs create uncertainty for businesses in the short term. Exports in key sectors for each country (e.g., autos, oil and gas, and agricultural goods) could be targeted. During trade conflicts in the NAFTA era, the countries used a rotating list of tariffs to add an extra level of unpredictability. Additionally, Canada and Mexico could impose non-tariff retaliatory measures. For example, Mexico could slow-walk cooperation on immigration, particularly on the repatriation of immigrants to the United States. Some in Canada are calling for cutting energy exports to the U.S. 

• The dynamics are likely to remain fluid over several months. At the time of writing, reports suggest the incoming administration is undecided on whether to pursue an across-the-board tariff on all goods or a sector-targeted approach, and the extent to which Canada and Mexico should be targeted for special treatment. However, leaders’ current willingness to engage in dialogue, including Trump, signals their primary objective may be leveraging tariffs as a bargaining tool to achieve broader policy or economic wins. 

Border Closures: Immigration and border control were key issues in the campaign and will remain key during Trump’s second administration. This will have spillover effects on trade and foreign relations. Trump is expected to declare a national emergency on migration during his first days in office, granting him broad authority to implement swift border closures. 

• Border closures and ramp-ups of inspections could lead to significant delays and associated costs in shipping. Previous border closures have affected nearly all types of shipping, including railroad crossings. Businesses should be highly aware of the logistical sensitivities of their goods, how much they ship and at what frequency, and the impacts of delays on their customers. 
• Both complete closures and partial closures are a possibility – each with their own challenges. In April 2019, for example, the Trump administration reassigned border agents and closed ports of entry in an attempt to address irregular migration at the U.S.-Mexico border. Wait times to cross increased by 500% from the previous month. 

Trends to Watch for the USMCA review   

Although the USMCA review is scheduled for 2026, several issues have already been raised in business and government circles as ripe for renegotiation. Businesses operating across North America will need to prepare for potential shifts in regional trade dynamics. The review will determine whether the agreement is extended for 16 more years or subjected to annual reviews until its expiration or renewal in 2036. 

Key issues which could be open for renegotiation during the review include: 

• Automotive: Rules of origin compliance remains a contentious issue, with U.S. industry leaders demanding stronger protections for domestic manufacturers. Trump has indicated autos will be a priority for the review. Businesses should anticipate stricter enforcement of regional value content requirements and prepare for tariffs targeting Chinese-origin components with the potential for tariffs of over 100%. Moreover, the Trump administration has vowed to take a stringent approach to Chinese investments in Mexico as an alleged circumvention of U.S. tariffs on Chinese imports. Although Mexico has denied the existence of such investments in the automotive sector, President Sheinbaum recently announced the creation of a CFIUS-like mechanism to review foreign investments into Mexico, presumably aimed at disincentivizing future Chinese investments. 

• Energy: Mexico’s 2024 energy and autonomous bodies reforms, which consolidated Federal Electricity Commission (CFE) control over the sector and eliminated the Regulatory Commission for Energy (CRE), could face scrutiny regarding compliance with USMCA commitments. The Mexican government is keen to identify solutions before the formal revision period, such as opportunities for the private sector in the generation and use of renewable energy. 
• Textiles and Dairy: Mexico and Canada are expected to push for measures safeguarding their respective industries, creating both opportunities for local producers and potential hurdles for exporters reliant on integrated supply chains. 

Political Developments and their Business Impacts: 

• Canada: 2025 will be a year of unusual political volatility in Canada that could delay a cohesive approach to USMCA negotiations. A Conservative electoral victory could push Canada to prioritize a bilateral agreement with the U.S. over trilateral cooperation. This could undermine integrated supply chains in automotive and other sectors, strain Canada-Mexico relations, and may even embolden U.S. negotiators to demand greater concessions from Mexico. 
• Mexico: Mexico’s objective is to continue the agreement with minimal changes. To this end, Secretary of Economy Marcelo Ebrard is taking a more pragmatic approach to trade relations. This includes more high-profile efforts to curb trade violations and reinforce businesses’ compliance with the agreement’s provisions. Mexico is also seeking to prevent “border-skipping” or the use of Mexico to access the U.S. market and associated USMCA benefits. Measures include a new tariff on textile imports for countries without a free trade agreement with Mexico that will be particularly impactful on Chinese companies. 

Trends to Watch Elsewhere  

While North America will be a key focus of the Trump administration, some trends will have whole-of-region impacts: 

• China and the Americas: The Trump administration will be highly critical of Chinese influence in the Western Hemisphere. This could take the form of investment screening, targeted tariffs, and demands for governments to reject deals from Chinese investors in key sectors. However, retaliatory measures on Chinese goods could also adversely affect American consumers. 

• Shifting Alliances: Hemispheric alliances may shift as right-leaning governments, like that of Javier Milei in Argentina, seek to position themselves as partners to Trump. Milei is expected to mirror Trump’s policies in multilateral forums (the Argentine delegation walked out of COP29 following Trump’s election). However, other countries that typically side with the United States may be more cautious. Panama, for example, was caught off-guard with Trump’s claim to the canal, despite its president being one of the most pro-U.S. in the region. Countries with left-leaning governments may face greater challenges maintaining high-level cooperation. Brazil is notably hosting both the BRICS summit and COP30 this year, with U.S. participation at the latter uncertain. Trump has also threatened to impose a 100% tariff on BRICS countries if they try to create a currency alternative to the U.S. dollar. Trump’s nominee for Secretary of State, Marco Rubio, has been a vocal critic of Colombian President Gustavo Petro, speaking out against his approach to foreign policy, migration, and security. The second Trump administration is also expected to impose tougher sanctions on Venezuela than during his first term, effectively closing the door for all U.S. businesses. 

Recommendations to Businesses  

DGA ASG recommends that companies continue monitoring with an eye towards tariffs, supply chain snares, and shifting geopolitical dynamics. Companies should seek to proactively identify and engage with key decision-makers before policies such as border closures take place. In conversations with officials, it will be crucial to emphasize the business’s unique value proposition, the benefits to U.S. firms and consumers in revenue and jobs, and, more broadly, direct linkages between investments in the region and the U.S. Finally, companies should seek to develop contingency plans for supply-chain related challenges to mitigate increased costs or damages to goods. 

About DGA Group

DGA Group is a global advisory firm that helps clients protect – and grow – what they have built in today’s complex business environment. We understand the challenges and opportunities in an increasingly regulated and interconnected world. Leveraging the expertise and experience of our team at Albright Stonebridge Group, a leader in global strategy and commercial diplomacy, and a deep bench of communications, public affairs, government relations and business intelligence consultants, we help clients navigate and shape global policy, reputational and financial issues. To learn more, visit dgagroup.com.

For additional information or to arrange a follow-up, please contact Alvaro.Vertiz@dgagroup.com and Justin.McCarthy@dgagroup.com.