Key Points:

• Worker groups are pushing to remake the USMCA into a stronger labor enforcement tool.
• Unions urged the Trump administration to adopt enforceable wage floors and increase use of the Facility-Specific Rapid Response Mechanism.
• Companies should anticipate increased scrutiny in North American supply chains in terms of labor and possibly environmental enforcement.
• The USMCA review process may drive more aggressive enforcement that could affect manufacturing and multinational business operations in Mexico.

Workers Seek Far-Reaching Revisions

At a December 2025 public hearing held by the Trump administration to assess potential changes to the United States–Mexico–Canada Agreement (USMCA), worker organizations urged far-reaching revisions aimed at strengthening labor rights, raising wages — particularly in Mexico — and discouraging outsourcing.

Worker groups argued that companies have offshored jobs since NAFTA was signed more than 30 years ago in pursuit of low wages and weak worker rights protections in Mexico. Echoing a phrase made famous by 1992 presidential candidate Ross Perot, one union witness described the offshoring of jobs as a “giant sucking sound” that was a “feature, not a side effect, of our trade policy.” This witness cited the loss of five million manufacturing jobs and the closure of 90,000 facilities since NAFTA was signed and, further, while U.S. union members in aerospace manufacturing earn $40 or $50 an hour, the average Mexican worker earns just $4 to $6 an hour.

Another union witness said that the USMCA did not stop the trend, pointing to the 10:1 wage gap between U.S. and Mexican manufacturing workers and observing that, since 2019, the year before the USMCA went into effect, the trade deficit with Mexico increased by 74% to $171 billion. Summing up the sentiment, a witness noted, “capital is very easy and quick to move, but labor is not.” (Transcripts of the hearing can be found here.)

Recently, the U.S. Trade Representative (USTR) acknowledged to Congress that not every objective related to creating jobs and bolstering domestic manufacturing has been achieved, but pointed to areas of success, including:

The USMCA has provided some certainty for North American trade. U.S. exports of goods and services to Canada and Mexico are up 56 percent since 2020. Wages for Mexican workers have nearly doubled, from $2.3/hour in January 2020 to $4.2/hour in September 2025, at least in part, thanks to the labor reforms required by the Agreement and frequent use of the Rapid Response Mechanism. This makes it easier for U.S. workers to compete against Mexico. Mexico has managed to capture approximately 25 percent of the reduction in our bilateral trade deficit with China, demonstrating the important role that Mexico plays in U.S. supply chain resilience efforts.

Among the proposed changes urged by worker groups are a major expansion of worker rights protections enforceable through the trade agreement, including:

• Establishing a North American minimum wage, with some organizations calling for a floor of at least $16 per hour, particularly in key manufacturing sectors.
• Creating other “floors” covering occupational health and safety and environmental standards, with the potential denial of tariff benefits for countries that fail to comply.
• Adding industry-wide labor agreements, enforceable through the trade agreement, as a means of raising wages more broadly in Mexico.
• Expanding the USMCA’s Facility-Specific Rapid Response Mechanism (RRM) beyond freedom of association and collective bargaining claims to include other labor claims, including discrimination and occupational safety and health, and to cover all sectors. We previously wrote about the RRM’s impact on multinational corporations that operate facilities in Mexico.
• Developing an RRM-style enforcement mechanism for environmental standards, allowing pollution violations at specific facilities in Mexico to trigger trade consequences. One witness argued that low pollution standards in other countries could create their own “giant sucking sound” of outsourcing.

While some worker organizations described the RRM as a significant improvement over NAFTA, they testified that it has not produced widespread wage growth and union representation or meaningfully reduced offshoring; worker organizations also filed written comments with the administration.

Groups with different interests argued, in written comments, that the USMCA should be revised to give companies a more meaningful opportunity to respond to labor allegations, among other changes.

What This Means for Companies

Although no formal proposals have yet been released by the White House, the testimony suggests continued political pressure to use the USMCA review process to pursue more aggressive, facility-level labor (and possibly environmental) enforcement, as well as structural wage reforms. Companies with North American supply chains should monitor developments and contact experienced labor and trade counsel.

For more information on this and related topics, contact Mark G. Eskenazi at meskenazi@foxrothschild.com or 202.461.3109, Ian D. Meklinsky at imeklinsky@foxrothschild.com or 609.895.6756 or any other member of our Labor & Employment Department or International Trade Practice Group.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the authors and not necessarily this law firm or its clients.