Citi Institute has provided an analysis suggesting that the United States-Mexico-Canada Agreement (USMCA), also known as T-MEC, is unlikely to collapse in its upcoming review due to strong economic, trade, and cooperative ties among the three nations. The report, titled 'United States-Mexico-Canada Agreement: The Enduring Power of the Three,' anticipates a renewal of the agreement, albeit requiring concessions from both Mexico and Canada. It highlights that tougher rules of origin are expected, with Mexico's partnership with the U.S. in curbing China's influence being a significant factor in these negotiations.

The analysis indicates that the most probable scenario involves both Mexico and Canada adjusting key negotiation areas to maintain the agreement's relevance and operational integrity. This comes at a time when global trade dynamics are being increasingly influenced by geopolitical considerations, particularly the need to address China's growing economic power. The report also notes that if a deal is not reached this year, it could trigger new negotiations that may have further implications for trade relations within North America.

Overall, the Citi Institute's findings point to a complex landscape for the USMCA, with renewed terms likely reflecting a strategic shift in trade policy aimed at enhancing the regional economy while managing external pressures. The emphasis on stricter rules of origin suggests both a safeguarding of domestic industries and a cooperative approach to international trade challenges.