Tractor-trailers rumble through the gates of the World Trade Bridge, punctuated by the squeals of air brakes and growls of engines. South of the border, a line of trucks stretches back into Mexico, extending for more than a mile at the busiest times.
President Trump’s tariffs have reshaped America’s trading relationship with the world. Imports from countries like China have steadily fallen as tariffs went into effect. As a result, manufacturers have sought low-cost factories closer to home, prompting a boom in trade between the United States and Mexico.
Laredo, Texas, has been a winner from the shift. A border city on the Rio Grande, it directly connects the factories surrounding Monterrey, Mexico, about 150 miles away, with Interstate 35, a central artery in the United States, and other highways that carry Mexican products throughout the country. Roughly 40 percent of U.S.-Mexico trade passes through Laredo.
That trade is now in question as Mr. Trump demands changes to the North American trade agreement that has stitched together the economies of Mexico, Canada and the United States for more than three decades. In negotiations in Mexico City this week, U.S. officials will push for significant revisions to the trade deal the president signed during his first term — the United States Mexico Canada Agreement — which replaced NAFTA. Under those deals, goods have been allowed to move between the countries tariff free, as long as they follow the rules of the pact.
Mr. Trump has already taken a highly disruptive approach to North American trade. He has threatened to scrap U.S.M.C.A. altogether unless the United States gets a better deal, a disastrous scenario for the businesses that depend on it. On July 1, he declined to renew the agreement, starting a 10-year clock for its expiration. And on Monday, Mr. Trump signed orders to impose a 50 percent tariff, starting next month, on Canadian goods ranging from plywood and paper to cement and hockey sticks, a move some speculated was an effort to force Canada to the negotiating table.
Negotiations with Mexico have been smoother, but U.S. officials say they want to see big changes to the relationship. Since U.S.M.C.A. was signed in 2018, the U.S. trade deficit in goods with Mexico has more than doubled, irking Mr. Trump. U.S. officials want their Mexican counterparts to adopt changes to the pact that would require manufacturing more products in the United States and give U.S. companies greater access to the Mexican market. Mr. Trump has put tariffs on some goods from Mexico, including steel, copper and tomatoes, but most U.S.M.C.A. goods continue to come into the United States tariff free.
Laredo is still betting on the deal’s survival. It is investing in new warehouses and the expansion of the World Trade Bridge and other border crossings. Imports of computers, cars, cellphones, tractors and air-conditioners move through the port from Mexico, and car parts, diesel engines, plastics, refined copper and batteries are sent back as part of the cross-border trade that has become key to a range of industries, including automobiles.
Laredo has edged out the Chicago O’Hare International Airport, New York’s John F. Kennedy International Airport and the Port of Los Angeles to become the country’s biggest port by dollar value this year.
“Hopefully it’ll keep rolling and everything will keep flowing through,” said Don Booth, 66, as he walked through a massive warehouse he manages north of the border. Giant fans stirred the hot air of the warehouse, which housed roughly 6,000 sleek off-road vehicles manufactured in Monterrey, Mexico, by Polaris, a Minnesota-based company.
Tractor-trailers waited at loading bays surrounding the factory to carry the Mexican-made vehicles to distributors across the United States. Other trucks would be filled with U.S.-made chassis, motors, tires and shocks, and sent southward to feed the company’s Monterrey plant.
Mr. Booth said that he had seen business slow as Mr. Trump issued tariff threats and companies tried to regroup. He said he was “wary” about the effect of tariffs, but overall business was flowing well. “Mexico is a good partner,” he added.
Supporters of the North American trade deal argue that Mexican imports are still beneficial for the United States. In addition to supplying U.S. consumers with the cheap and plentiful products they’re used to, Mexico is also the United States’ largest export market after the European Union. Many goods manufactured in Mexican factories are made with cotton, plastics and petroleum that are produced by American workers.
Others supporters of the pact argue that having access to low-cost production in Mexico helps make U.S. companies more competitive against rivals from Asia or Europe.
But the trade deal also has plenty of critics, who say that lower wages in Mexican factories continue to undercut U.S. manufacturing jobs.
In a white paper published in June, the United Automobile Workers union called U.S.M.C.A. and its predecessor, NAFTA, a “free trade disaster.” The union proposed adding a new minimum manufacturing wage for North America, and a requirement for companies to manufacture cars in the United States if they want to sell them there.
“If these standards are not met, the United States should withdraw from the U.S.M.C.A.,” the union said.
To some, it seems curious why Mr. Trump is criticizing the deal he himself signed. At the time, he called it a “colossal victory” that would end “the NAFTA nightmare.”
Though USMCA kept much of the structure of NAFTA intact, it also contained revisions intended to increase U.S. manufacturing. USMCA required automakers to make more of their cars in North America to qualify for zero tariffs under the pact. It also required Mexico to strengthen its labor laws, among other changes.
But critics argue that those changes were not fully realized. The U.A.W. says that automakers simply ignored some of the more complicated rules, like the requirement to have workers earning at least $16 an hour make more of a car’s content. Instead, some companies chose to sidestep the USMCA rules by simply paying a tariff of 2.5 percent to import cars. In Mexico, corrupt unions maintained control, and labor reforms were only partial, the U.A.W. says.
Others argue imports from Mexico have boomed in part because of Mr. Trump’s own actions. In his first term, the tariffs the president imposed on China — the world’s biggest manufacturer — sent companies scuttling to other locations with cheap labor so that they could continue to supply U.S. consumers with inexpensive products. In 2023, Mexico surpassed China as the top source of U.S. imports.
This time around, U.S. officials have proposed raising USMCA’s requirement for how much of a car must be made in North America to 82 percent from 75 percent. They have also suggested requiring 50 percent of a car’s content to come from the United States.
U.S. officials have proposed new content requirements for other products, such as electronics. They are also pressing Mexican officials to do more to block Chinese goods from coming through Mexico into the United States. This year, Mexico began a substantial overhaul of its customs system to better track the components and raw materials in exports to the United States.
In an interview with The New York Times last month, Jamieson Greer, the U.S. trade representative, said officials had been discussing new rules of origin for other industries, including electronics. Mr. Greer said the United States and Mexico were exploring whether they could reduce the U.S. trade deficit with Mexico, while simultaneously encouraging a return of manufacturing to North America.
“Are there ways we can adjust the rules of origin to make it more rewarding to have more of your electronic supply chain in the United States and Mexico?” he asked.
Mr. Greer is set to testify before a Senate committee on Wednesday.
Auto companies have complained that these requirements are too onerous, and will simply encourage more manufacturing outside of North America. Cars imported from Japan and South Korea, for example, face only a 15 percent tariff when coming into the United States under deals struck with the Trump administration.
The negotiations seem unlikely to conclude soon. Although the United States and Mexico have been in talks for several months, U.S. negotiations with Canada have not officially started. Mexico and Canada have been talking on their own, though not carrying out formal negotiations.
Diego Marroquín Bitar, a fellow with the Americas program at the Center for Strategic and International Studies, said the most likely scenario for the North American trade pact was a “painful extension,” in which negotiations drag on for many months.
He said that uncertainty stemming from the USMCA negotiations would likely dampen investment, including in factories.
“Companies don’t invest on hope, they invest on predictability,” he said.
Representative Henry Cuellar, Democrat of Texas whose district includes Laredo, said that U.S.-Mexico trade had been on the rise, but that tariffs, immigration raids and uncertainty over the future of USMCA were all holding back local investment.
“Investors don’t know, ‘Do we invest in this warehouse? Do we do this? Do we not do this?’ And it has a chilling effect,” Mr. Cuellar said.
JD Gonzalez, a customs broker in Laredo who is contemplating a run for city mayor, also said that Mr. Trump’s tariffs on some items, like steel, aluminum, copper and tomatoes, had slowed trade locally, leading to more empty space in local warehouses.
Mr. Gonzalez was born in Laredo, and he saw trade and the city’s population boom after NAFTA was signed. In 2000, the World Trade Bridge was opened to relieve pressure on a border crossing downtown. Now, 18,000 trucks can cross Laredo’s bridges daily.
Locals refer to the entire region, whether the United States or Mexico, as la frontera, the border. For decades, people went freely back and forth across the Rio Grande to work, shop, drink and dine.
As cartel violence picked up in Nuevo Laredo, the city across the border, in the 2000s, the cities became more divided. But many truck drivers still make multiple trips a day.
Laredo is essentially “a big truck stop,” Mr. Gonzalez said. “Everything passes through.”
“USMCA has been really beneficial for our area,” he said. “We are stronger as a continent than as individual countries.”
James Wagner contributed reporting.
