The global contest for industrial dominance isn’t between companies or even countries anymore. It’s between continental production systems.
Over the past two decades, China has built the most expansive manufacturing ecosystem in modern history. Twenty years ago, the United States accounted for more than twice China’s share of global manufacturing output. Today, China claims about 30 percent—roughly twice the U.S. figure.
Scale tells much of the story. China has constructed nearly two billion square meters of industrial warehouse space, the logistical spine of its manufacturing juggernaut. Mexico’s entire industrial real estate market, by comparison, is about 100 million square meters. If Mexico built capacity equivalent to just five percent of the warehouse space in China’s major manufacturing cities, its industrial footprint would double.
For the past three decades, all Foreign Direct Investment (FDI) into China had to be anchored in hiring local providers and local workers, partnering with a Chinese company to produce and an obligation to technological transfer, among many other things. All of these have a profound involvement of the Chinese government.
This isn’t to say North America should mimic China. But it should learn from it. To compete with Asia’s integrated bloc, the region needs a deliberate strategy that puts small and medium-sized enterprises (SMEs) at the center, as the engine of widespread prosperity.
When we think about who gets the most benefits from the USMCA, most people point first to Mexico, then to Canada and sometimes hesitate about the United States. Yet we must double-click on those figures to be even more precise. A huge winner of the USMCA — not widely discussed enough — are American SMEs. Not the big Wall Street public companies, but actually the farmer from Iowa and Nebraska, the manufacturer from Ohio and Michigan, the family-owned machine shop in Texas and California. Let me explain why.
Mexico and Canada are the top destinations for U.S. SME export value, outpacing every other market. In recent years, SMEs have shipped roughly $90-110 billion to Mexico annually (40–45% of total U.S. exports there) and $80-100 billion to Canada (35–40% of the total). Proximity slashes costs, USMCA rules reward regional content and supply chains are so intertwined that smaller firms can plug right in-shipping parts to Monterrey or produce to Toronto without the headaches of trans-Pacific hauls. Against European or Asian competitors, these near-shore partners give American SMEs a decisive edge: lower barriers, faster turnaround and just-in-time reliability that far-flung rivals can’t match. Those exports keep heartland fields productive, Rust Belt factories humming and small-town paychecks steady — sustaining middle-class jobs where big multinationals often overlook.
Yet this SME success is uneven. FDI in Mexico clusters in the north and Bajío, leaving the south-southeast — a region rich in agriculture and untapped potential — largely sidelined. In the U.S., Rust Belt revival often focuses on headline-grabbing OEMs, ignoring the supplier networks that could revitalize smaller communities. To build a true regional utopia, we need policies that integrate SMEs everywhere, ensuring no part of North America is left behind.
The USMCA recognized this reality: Chapter 25, dedicated specifically to SMEs, was designed to help smaller firms access the opportunities created by regional trade. Yet, the next phase of North American integration should go further.
SMEs should not merely benefit indirectly from integration. They should become a central pillar of the region’s industrial strategy. I see several practical steps that could move North America toward a stronger SME-driven production platform.
First, we must ensure the development of supplier ecosystems. Industrial clusters, business and trade organizations should actively incorporate small firms into their supply chains and communities. Along with this should come trainings, know-how and technological transfers. Incentives for foreign investment could prioritize projects that develop local supplier networks, particularly in sectors such as automotive, electronics, agribusiness and advanced manufacturing. We must lose the fear of asking for conditions for foreign investors, not just set the dollar sign as the sole KPI (cough cough, this message is for you, my dear friends at the EDOs and Mexican Secretarios de Desarrollo Económico).
Second, talent mobility and workforce development. SMEs often face labor shortages and skills gaps. Regional certification systems and targeted mobility programs could enable technicians, engineers and specialized workers to temporarily cross borders to where they are most needed. This in hand can create regional spillovers in knowledge and ways (I will cover this topic in more depth in an article about talent mobility).
Third, digital integration of supply chains. China did it already. Digitalizing SMEs’ supply portfolios in a standardized way is the gateway to accessing big buyers. Small firms often struggle to navigate complex rules of origin, certification requirements and customs procedures. A unified North American digital trade platform, including single-window customs systems and shared supplier databases, could lower entry barriers and connect SMEs directly to regional manufacturing networks.
Fourth is access to capital investment. Development banks — national and regional — should increase capital risk investments to facilitate their access to SMEs and enhance their growth capacity. Without this, none of it will work.
Fifth is trusted-trader interoperability. Programs such as the U.S. CTPAT and Mexico’s OEA initiative already allow certified companies to move goods across borders with fewer inspections. Making these programs fully interoperable for SMEs would reduce border friction and allow smaller firms to participate more easily in cross-border supply chains.
Sixth, secure logistics corridors. Increased security in Mexico is essential for SMEs’ participation in regional supply chains. While big companies have equally big budgets to mitigate security risks, SMEs don’t have that margin. Security instability is an SME’s death penalty. (I will also dive deeper into these two topics when I write about the border).
‘We want there to be zero robberies on Mexico’s highways’: Tuesday’s mañanera recapped
We could increase the percentage of rules of origin for USMCA tariff-free access to North America. Nonetheless, if we don’t enhance the avenues for SME creation, empowerment and capacity building, we’ll undoubtedly be shooting ourselves in the foot (again?).
This isn’t zero-sum. When Mexican manufacturers grow, they buy U.S. machinery. When U.S. agricultural exports rise, Mexican logistics and processors expand too. China didn’t dominate because of a few giants; it built a dense web of suppliers, parks, and clusters.
I have no doubt that strengthening the millions of SMEs across the U.S. and Mexico will prove to be the most decisive step in turning integration into lasting prosperity.
Pedro Casas Alatriste is the Executive Vice President and CEO of the American Chamber of Commerce of Mexico (AmCham). Previously, he has been the Director of Research and Public Policy at the US-Mexico Foundation in Washington, D.C. and the Coordinator of International Affairs at the Business Coordinating Council (CCE). He has also served as a consultant to the Inter-American Development Bank.
