In late 2023, Mexico and the United States launched a joint “semiconductor action plan” that aims to make North America the world’s “most powerful” chip-producing region.
A central aim of the plan is for North America to reduce its reliance on Asia for semiconductors, vital components in a vast range of products, including computers, smartphones, electric vehicles and advanced medical devices.
The framework of the USMCA free trade pact — which will be reviewed by its three signatories in 2026 — will provide crucial support for that objective.
In that context, the Semiconductor Industry Association (SIA), a Washington, D.C.-based trade and lobbying group, wrote to the Office of the U.S. Trade Representative (USTR) to comment on “specific USMCA provisions of interest to the semiconductor industry,” including the pact’s rules of origin.
In a Nov. 3 letter addressed to Assistant U.S. Trade Representative for the Western Hemisphere Daniel Watson, the SIA wrote that “the USMCA is vital to the success of the U.S. semiconductor industry,” and noted that “Canada and Mexico are close U.S. trading partners in semiconductors,” with each playing “a distinct but important role in North America’s semiconductor supply chain.”
“The USMCA supports a competitive and resilient North American semiconductor supply chain that is tightly linked throughout the production process, with subcomponents and semiconductors crossing between the U.S., Canada, and Mexico before being integrated into a wide range of downstream industries such as automotive, industrial manufacturing, telecommunications and consumer electronics,” the association said.
SIA: Rules of origin should encourage investment in North American semiconductor supply chains
In order for North America to become the world’s top chip-producing region, significant investment in the semiconductor sector will be required, including from major Asian companies such as Taiwan’s Foxconn.
Third quarter global #semiconductor sales were $208.4 billion, an increase of 15.8% compared to the second quarter of 2025. September 2025 global sales were $69.5 billion—an increase of 25.1% compared to September 2024. Market growth was driven by increased demand across a range… pic.twitter.com/4aEKBKkcf3
— SIA (@SIAAmerica) November 3, 2025
When launching the joint semiconductor action plan in October 2023, then U.S. secretary of state Antony Blinken noted that among the aims of the initiative were “to accelerate” semiconductor sector integration between the United States and Mexico and “to scale our efforts to attract new investment.”
For its part, the SIA urged the USTR to “ensure the USMCA’s rules of origin strengthen U.S. semiconductor competitiveness, encourage greater investment in North American supply chains, and account for differences in existing and planned supply chain operations to produce different types of semiconductors.”
“Tailored rules of origin can play an important role in encouraging the integration of U.S. semiconductors into various finished goods manufactured in North America,” the association said.
The SIA said that, “should USTR consider any potential changes to rules of origin and related calculations during the [USMCA] review process” in 2026, “we strongly recommend U.S. negotiators hold meaningful consultations with strategic sectors, including the semiconductor industry.”
With regard to “any potential changes,” the SIA said that the “negotiating parties should ensure a realistic timeline for implementation and compliance by North American companies.”
Asian semiconductor companies will invest in North America if it makes economic sense for them to do so. A major incentive to manufacturing in the region is preferential access and proximity to the United States, the world’s largest economy and a leader in technological innovation, including AI, which ensures a huge demand for semiconductors.
Within North America, Mexico can be a particularly advantageous place to manufacture due to factors including its privileged access to the United States market, via the USMCA, and the affordability of labor costs.
However, that privileged access has been undermined to some extent this year by the Trump administration, which has imposed tariffs on a range of imports from Mexico.
The SIA indicated that it would not like to see any U.S. duties on semiconductors and related components that are made in North America and which comply with the USMCA.
“As the U.S. government considers potential tariff actions, we hope the USMCA review process ensures the U.S. semiconductor industry retains its pole position in the race to be the most globally competitive. Given the far-reaching consequences of imposing tariffs on semiconductors, semiconductor manufacturing equipment, and related parts and components, maintaining a straightforward tariff regime for semiconductors and related technologies, including appropriate treatment of products that are compliant under USMCA, is crucially important,” the association said.
Investment in Mexico’s semiconductor sector would create jobs here and help to increase exports. In the first seven months of the year, Mexico’s semiconductor sector exports to the United States declined more than 50% annually to $427 million, leaving it well behind countries such as Taiwan, Malaysia and even Costa Rica as a supplier of the crucial components to the U.S. market.
Trump’s chip tariff poses mixed fortunes for Mexico’s growing semiconductor industry
‘Harmonization is needed across North America’
In response to the USTR’s call for public comment on the USMCA ahead of its scheduled review in 2026, the SIA also referred to a range of other “provisions of interest” in the trade pact that superseded NAFTA in 2020.
With regard to “economic security,” the association encouraged the Trump administration “to align with the governments of Canada and Mexico on … measures to address content from countries of concern.”
“… We encourage the Administration to work with Canada and Mexico to align enforcement and compliance rules that strengthen regional economic security. For example, continued customs cooperation can help combat diversion, prevent trade in stolen IP [intellectual property], and facilitate goods shipments,” the SIA said.
“… Harmonization is needed across North America to avoid costly and diverging economic security regulations and practices. We applaud the Canadian government’s efforts to strengthen its foreign investment screening mechanism in recent years,” the association said, adding that “we hope the U.S. government can continue to make progress in working with the Mexican government on similar foreign investment screening measures.”
In late 2023, Mexico and the United States agreed to cooperate on foreign investment screening as a measure to better protect the national security of both countries. The plan appeared to be motivated to a large degree by a desire to stop problematic Chinese investment in Mexico, which U.S. President Donald Trump and other politicians in the U.S. and Canada have expressed concern about.
Among other comments, the SIA urged the USTR to “preserve the integrity of Chapter 19 (Digital Trade) [of the USMCA] to support North American innovation and competitiveness.”
“The semiconductor supply chain relies on open and secure data flows across international borders, as virtually every step in the value chain involves the electronic transmission of data,” the association said.
With reports from El Economista
