A proposal for the future of the continent
A customs union for North America: one tariff at the edge, goods moving freely inside. Everything else stays national.
01 · The union at a glance
A customs union is the step after a free trade area. It changes how goods are treated at the border, and nothing else.
The evidence: why a customs union beats a free trade areaEvery imported product pays the same duty, whether it lands in Vancouver, Houston or Manzanillo.
Once inside North America, goods cross between the three countries with no customs clearance and no certificates of origin.
One policy on antidumping, safeguards and competition, applied by each country’s own agencies under mirror laws. No new supranational bureaucracy.
Tariff revenue is split by formula: part to the country where goods arrive, the rest according to each country’s contribution to regional trade.
One policy toward the rest of the world, backed by the buying power of 521 million people: imports cost less, and the region competes with China, India and the European Union as one.
Labor mobility is not part of a customs union. It is best handled separately, through a managed agreement among neighbors (see “Neighbors already” below).
02 · The common tariff
Today each country charges its own duties on goods from outside the region. In the union there would be one schedule. Here is how sample products compare today, and where the common rate would land.
The evidence: what a large buyer gains from one tariffThe clearest case
In 2024 the United States and Canada both put a 100% tariff on Chinese electric cars. In January 2026 Canada agreed to let in up to 49,000 a year at 6.1%, while Mexico set its own rate at 50%.
When neighbors charge different rates, only rules of origin and border checks keep the cheapest door from becoming everyone’s door. A common tariff closes it by design.
The evidence: three tariffs drifting apartPercent of the car’s value
In a customs union: one rate, whichever port the car enters. No cheapest door.
U.S.: 2.5% MFN plus 100% Section 301 duty (2024), excluding other duties added since 2025. Canada: 6.1% MFN plus 100% surtax (Oct. 2024); since Jan. 2026, up to 49,000 vehicles a year at 6.1%. Mexico: 50% under the 2026 reform. Sources: USTR, Government of Canada, DOF; press coverage (CNBC, Reuters).
Duty on imports from outside the region, percent of value
Rates are those applied to countries without a trade agreement (MFN), excluding temporary additional duties imposed since 2025. Mexico’s rates reflect the reform in force since January 1, 2026. Common rates are illustrative. Sources: U.S. Harmonized Tariff Schedule, Canada Customs Tariff, Mexico’s LIGIE (DOF, Dec. 29, 2025), WTO Tariff & Trade Data.
In 2023, 2,278 tariff lines (40.6%) already carried the same lowest rate in Mexico and the United States, covering 61% of U.S. imports and 66% of Mexico’s. These go first. The region has done this before: under NAFTA, the three countries aligned their outside tariffs on computers and color TV tubes.
40.6% of tariff lines already identical (U.S.–Mexico, 2023)
Where rates differ, converge on the lowest rate consistent with WTO commitments, as a 2005 trinational task force recommended. The union must be more open on the whole than what it replaces, as GATT Article XXIV requires.
North America imports about $500 billion a year in machinery and equipment and $400 billion in vehicles, 30% to 50% of what its suppliers export. When a buyer is that large, a jointly set tariff can lower the prices the region pays.
Sensitive products such as dairy and sugar would face one duty, and their import quotas would be pooled and auctioned among importers across the whole region.
03 · One perimeter
Follow one part: imported from Asia, assembled in Monterrey, sold in Detroit.
Pays Mexico’s duty, which may differ from the U.S. or Canadian rate for the very same item.
Pays the common North American duty once, the same at any port.
The factory traces every input’s origin to prove enough regional content.
The factory buys inputs wherever they are best. No origin arithmetic.
Origin certificate, customs agency fees of 1–3%, unloading and reloading between warehouses. If it falls short of the rule, it pays the U.S. tariff.
Circulates as a North American good. No origin certification, no customs clearance for goods.
Every cost along the way is in the final price.
Lower costs, faster delivery, one continental market.
Agency fees run 1–3% of invoice value: what a customs agency at the U.S.–Mexico border typically charges, before warehousing, reloading and waiting time.
Why it matters now
Regional value content required for passenger vehicles
U.S.–Canada FTA (1989): 50%. NAFTA: 62.5% once fully phased in. USMCA: 66% (2020), 69%, 72%, 75% (2023), plus labor-value and steel rules. Sources: USMCA Ch. 4; Congressional Research Service. In a customs union, internal trade needs no origin rule.
Share of U.S. imports entering duty-free under USMCA, before and after the 2025 tariffs
When tariffs hit partners in 2025, firms rushed to certify origin. It worked, and showed the cost: every shipment must prove it is North American. In a customs union, it simply is.
Dallas Fed (2026): about 50% (Mexico) and under 40% (Canada) before, about 80% by July 2025. USTR (2026): 94.7% of vehicle imports from Canada and Mexico claimed USMCA in 2025.
04 · Built in North America
The three countries no longer just buy and sell from each other: they produce together. Three decades of evidence, brought up to date.
The evidence: a region that produces togetherBillions of U.S. dollars per day
1993, 2013: Serra Puche (2015), INEGI. 2025: INEGI, $643.6 billion of non-oil exports. Oil is now 3% of Mexico’s exports.
Billions of U.S. dollars per year
Averages: Serra Puche (2015), INEGI. 2025: Secretaría de Economía, $40,871 million, the highest on record.
Exports plus imports, percent of GDP
Before and after joining GATT (1986): Serra Puche (2015). 2024: World Bank data.
U.S. goods imports, billions of dollars, 2017 and 2024
In 2023 Mexico overtook China as the largest source of U.S. imports for the first time in two decades. Sources: Bureau of Labor Statistics (2017), U.S. Census Bureau (2024).
$10,166
to ship one 40-foot container from Shanghai to New York in October 2026. In 2021 the global index peaked at $10,375. Distance is a risk; a neighbor is a hedge.
Drewry World Container Index
60%
of U.S. crude oil imports came from Canada in 2023, and U.S. pipeline gas exports to Mexico hit a record 6.4 billion cubic feet a day in 2024.
U.S. Energy Information Administration
$1.6T
in U.S. goods trade with Mexico and Canada in 2024, its two largest partners: 2.7 times its goods trade with China.
U.S. Census Bureau
Mexico
Attract production of intermediate and manufactured goods now made in Southeast Asia, using a young workforce close to the world’s largest consumer market.
United States
Make the capital-intensive industrial goods the region now buys from Europe and Northeast Asia.
Canada
Supply the energy, minerals and materials a growing continental industry demands.
The scrambled egg theorem
Thirty years of free trade have turned three economies into one production system. Pulling it apart would break all three; standing still keeps every cost of the border. Scroll to see why only one move is left.
The evidence: integration that can’t be undone1993
Before NAFTA, three economies sat side by side, each behind its own tariff wall. They traded with each other, but production stayed mostly national.
$293BU.S. goods trade with Canada and Mexico in 1993.
1994–2024
Free trade cracked the shells. Factories spread their work across all three countries: some car parts cross the border seven or eight times before they reach a finished vehicle, and each dollar Mexico exports to the United States carries about 40 cents of U.S. content.
$1.6TU.S. goods trade with Canada and Mexico in 2024, 5.5 times as much.
2017 · 2025
It has been tried. In 2017 the United States threatened to leave NAFTA; it ended up signing the USMCA. In 2025 tariffs hit both neighbors; instead of leaving, firms certified their goods as North American.
≈80%of U.S. imports from Canada and Mexico claimed USMCA by July 2025, up from under half.
Next
If the egg can’t be unscrambled, the rational move is to finish the dish: one common tariff around what is already one economy. Inside, no one asks where an ingredient came from.
0certificates of origin inside the union.
Theorem
Once economies have produced together for a generation, they cannot be pulled apart without breaking all of them.
Corollary
A free trade area cannot stand still either: its rules of origin keep tightening and its costs keep rising. The only stable move is forward, to a customs union.
The scrambled egg theorem: Jaime Serra Puche. Goods trade: U.S. Census Bureau (1993, 2024). Parts crossing borders: Congressional Research Service, IF11387 (2021). U.S. content: Koopman, Wang & Wei (2014). NAFTA renegotiation: Congressional Research Service (2026). USMCA claims: Federal Reserve Bank of Dallas (2026).
05 · The demographic advantage
Around 2014–15, North America’s workforce began to outgrow China’s. China’s working-age population peaked in 2014 and is now shrinking; North America’s keeps growing to 2050.
The evidence: a growing workforceIndex, 2000 = 100 · estimates to 2023, UN projections after
Source: UN World Population Prospects 2024 (medium variant), our calculations. North America = Canada + United States + Mexico; EU = 27 members.
Millions of people in each 5-year age group, by country
Source: UN World Population Prospects 2024, medium variant. Our calculations.
Under 15 and over 64, per person aged 15–64 · 2025 → 2050
Source: UN WPP 2024, our calculations. The same complementarity appears in 2012 data in Serra Puche (2015).
Median age, 2025
The next step is to put this combined pyramid to work through a trilateral circular-mobility agreement that matches labor supply and demand across the year, backed by security cooperation.
06 · Neighbors already
Integration works best between people who already have much in common. North Americans do.
The evidence: shared culture and mobilityShare of population identifying as Christian
Mexico: INEGI 2020 census (77.7% Catholic, 11.2% Protestant or evangelical). U.S.: Pew Research Center, 2023–24. Canada: Statistics Canada, 2021 census.
43M
people in the United States speak Spanish at home.
ACS 2023
37M
Americans are of Mexican origin.
Pew Research Center, 2021
~800k
people born in the United States live in Mexico, by far its largest foreign-born group.
INEGI, 2020 census
2
official languages in Canada, English and French, link it to both its neighbors and to the wider world.
Official Languages Act
Mobility, managed and among neighbors
A trilateral circular-mobility agreement would let workers move for a season or a project and return home, matching labor supply and demand across the year. To keep out illegal flows of labor from outside the region, it would be backed by security agreements, such as dismantling fentanyl supply networks in northwestern Mexico and fighting human trafficking in southern Mexico.
Europe shows why proximity matters. Over the past decade, immigration has become one of the most polarizing questions in European politics, with debates centered on integration across differences of language, religion and custom.
North America would start from common ground. Research finds that shared language and culture make migration both more likely and smoother for the people involved.
Adserà & Pytliková (2015); Belot & Ederveen (2012)
07 · Competing in the world
With one trade policy, the region can compete with single countries such as China and India and with blocs such as the European Union, and stay the most productive region in the world.
Every number on this page, with its sourcePopulation, median age and workers (ages 15–64): UN World Population Prospects 2024, our calculations. Economy: nominal GDP in current U.S. dollars, approximate, from IMF and national accounts.
08 · How we get there
Negotiators become implementers: instead of trading concessions, the three countries build one trade policy step by step, so firms can adapt and no supranational institutions are needed.
The evidence: institutions without supranationalismStart with the tariff lines already equal in all three countries.
Align non-tariff barriers on every line in the new book.
Add the common rate for all remaining lines.
Harmonize national competition laws and institutions.
Harmonize antidumping, countervailing duties and safeguards.
09 · Questions
No. There is no common currency, no free movement of people and no supranational government. It is a customs union: one outer tariff, free circulation of goods, and coordinated trade rules applied by each country’s own institutions.
The three governments, jointly, in stages. They start with the thousands of lines where rates already match and converge on the rest over a transition period. Each country keeps its seat and its voice.
The design points the other way. The common tariff converges toward the lowest rates and must be more open on the whole than today, as WTO rules require. Removing origin paperwork and border agency fees of 1–3% lowers costs further.
Today, goods can enter through whichever partner charges less. With one common tariff every door charges the same, so the back door closes by design, and the region sets one coherent policy toward third countries instead of three.
A two-part formula: a percentage to the country where goods arrive, and the remainder according to each country’s contribution to regional trade. The EU and the Southern African Customs Union already share revenue under their own formulas.
Immigration stays national. Any labor mobility would come through a separate, managed circular-mobility agreement among the three neighbors, backed by security cooperation against illegal flows.
Reforms that strengthen the rule of law, competition and independent institutions, and a gradual end to the special regime for exporters so that their suppliers are local. The union is an anchor for that agenda, not a substitute for it.
It is ambitious, which is why it is staged. Since July 2026 the USMCA is reviewed every year; each review is a chance to set a destination instead of patching the agreement.
10 · Built on research
This vision rests on a published proposal for a North American common tariff and on decades of research into customs unions, rules of origin and North American integration.
Explore the foundations