Five years ago, nearshoring was the safest bet in North American freight. Today it is a stalled file, and the reason has nothing to do with economics.
The case was earned honestly. COVID broke the 12,000-kilometre supply chain in front of everyone: ports jammed, container rates went vertical, a shortage of chips idled assembly lines across the continent. Companies concluded that proximity was worth paying for, and the money moved. Mexico passed China as the largest trading partner of the United States in 2023, the same year Laredo became the busiest trade port in America. Industrial absorption in Mexico peaked at 43 million square feet in 2022.
Canada was not a spectator in that plan. The pitch was a single continental factory floor, where Ontario parts, Mexican assembly and American buyers all sat inside one duty-free agreement, and Canadian carriers hauled the middle of it. CUSMA was the foundation the whole structure rested on.
That structure is now sitting idle.
Nearshoring investment announcements into Mexico fell 78 per cent year over year in the first quarter of 2026: 22 deals worth US$2.63 billion, against 402 announcements worth US$14.6 billion in the same stretch of 2025. Chinese direct investment into Mexico dropped 80 per cent last year. Mexican industrial property markets have recorded six consecutive quarters of supply outpacing demand, and manufacturing employment has fallen for 35 straight months. Headline foreign investment hit a record in 2025, yet total investment in the country still fell roughly 10 per cent.
Capital did not lose interest in North America. It lost confidence that North American trade rules would be honoured.
On July 1, the three countries sat down for CUSMA's mandatory six-year joint review. Canada and Mexico both supported a 16-year extension. The United States declined, and the agreement now limps along on annual reviews toward a 2036 expiry. Washington then walked away from the trilateral table entirely, opening separate bilateral negotiations with each partner, which is the oldest trick in the book for a larger party dealing with two smaller ones.
Nineteen days later, the administration reached for Section 338 of the Tariff Act of 1930, a retaliation provision that had gone effectively unused for more than 90 years, and imposed 50 per cent tariffs on roughly $20 billion in annual Canadian imports. Dairy, alcohol and motor vehicles. Those duties took effect last Wednesday.
Read the fine print on that measure, because it is the part that ends the nearshoring argument. Qualifying as CUSMA-compliant does not shield a shipment from these tariffs. The entire premise of building in Canada or Mexico rather than Asia was that meeting the rules of origin bought you certainty. August 19 established that it does not. A trade agreement only protects you if the largest party in it wants to be bound, and this White House has now said plainly, twice in two months, that it does not.
The freight numbers already show it. Canada-U.S. truck crossings are on pace for 11 to 12 million this year, down 3 to 5 per cent from the 12.4 million peak in 2024. Windsor-Detroit is off 6 per cent. Sarnia-Port Huron is down 4 per cent, Fort Erie-Buffalo down 3. Automotive freight has dropped 8 per cent and slipped from nearly 30 per cent of cross-border tonnage to 26. What is growing instead is agriculture, up 10 per cent, and the prairie lanes that move it: Coutts-Sweet Grass up 9 per cent, Emerson-Pembina up 7. That is the profile of a continent shipping raw commodities rather than manufactured goods, which is precisely what nearshoring was supposed to reverse.
Ottawa and Mexico City have responded the only way two middle powers can. Prime Minister Mark Carney and President Claudia Sheinbaum signed a comprehensive strategic partnership last September covering trade, energy, infrastructure and security. Sensible work, but the scale is honest about the problem: Canada-Mexico two-way merchandise trade ran near $56 billion in 2024, a rounding error next to what either country moves across the American border.
"For now" is doing real work in the headline. The capital has not fled to Asia; it is parked. Article 34.7.4 of CUSMA still lets the three heads of government extend the deal for another 16 years at any time, with signatures rather than a renegotiation. The machinery is intact. The willingness is not, and it is missing in exactly one of the three capitals.
For carriers, the planning assumption has to change. The border is no longer infrastructure you can build a business plan around. It is a policy variable that moves by executive order, sometimes with a month's notice and sometimes with none. Fleets betting on a southbound manufacturing boom are betting against Washington's stated position. The ones diversifying into agriculture, energy and the western lanes are reading the same numbers the investors are.