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USMCA Uncertainty Drives Supply Chain Scramble Across North America

Failure to ratify USMCA this year is forcing shippers and manufacturers in automotive, agriculture, energy, and electronics to build inventory buffers. Fundamental sourcing restructuring requires years, not months, according to Pawan Joshi, Chief Strategy Officer of E2open.

North American supply chains have spent three decades integrating across the U.S., Canada, and Mexico following the 1989 U.S.-Canada trade treaty, NAFTA, and USMCA. Automotive components alone cross borders six or seven times before vehicles leave assembly lines.

Short-term responses include pre-positioning inventory on both sides of the border to maintain factory and retail operations. Agriculture faces particular exposure, with the U.S. exporting corn, wheat, soy, pork, and dairy to Mexico while importing fresh produce including avocados, tomatoes, berries, and peppers. Energy and metals sectors share similar interdependencies through pipeline infrastructure and refining capacity. Restructuring these integrated supply chains cannot happen quickly.