NC Chamber General Counsel Ray Starling is no stranger to international trade policy and debates over whether this administration’s trade policy (or any other administration’s) is working or not. Having served as the Special Assistant to the President for Agriculture and Agricultural Trade during the first Trump term, Ray had a front row seat for the negotiations that begat USMCA and has watched closely as the Trump administration has navigated the six-year renewal notification option negotiated in the original agreement. He sat down with Gary Salamido, President & CEO of the NC Chamber, and the Board of the Chamber at its meeting in Asheville earlier this month, and we’ve adapted part of their conversations into this Chamber Update.

In the Q&A below, Ray shares his perspective on where trade policy stands today, what could come next, and what businesses should be watching.

Let’s start big-picture.  At one time, there was what appeared to be a bipartisan free-trade consensus among the leadership class in the U.S.  Is that gone and, if so, why?

The free-trade consensus that ran most vividly from around 1990 through 2010 is now unequivocally gone.  It does not exist in the politics of the current moment, and it really hasn’t for some time.  I think there are two major reasons why it dissipated.  The first reason is subtle: people didn’t decide the ideals of free trade were bad. What changed is that more and more of them figured out those ideals were, in actuality, just ideals.  And we all know that ideals aren’t always achievable in the real world.  The build up to the crescendo began with the bi-partisan adoption of NAFTA (which is a fascinating political story of an agreement negotiated by the outgoing President and signed into law with the incoming President from a different party over the objections of his own caucus on the Hill).  At the peak, we welcomed what we thought would be massive, two-way trading partners into the WTO and granted them Permanent Normal Trade Relations status, gave the President tons of leeway to negotiate bi-lateral or multi-national agreements, and sat back and waited for the results.  Turns out, the “rules based international order” had the rules, but not everyone followed them.  That’s where some of the angst is coming from today.

The second reason has more to do with human experience.  The deeper problem is that free trade’s promise assumes comparative advantage wins out “all other things being equal.” That phrase carries enormous weight in a world full of protectionism. But perhaps most relevant here, you end up with widely dispersed benefits and concentrated losses.  We all loved saving a few cents on the import, right up until the local plant closed.  The benefits of letting a nation with comparative advantage serve as the preferred supplier are sometimes hard to sense, particularly when it saves us only a few pennies here and there.  But when we lose a local manufacturing plant, the pain is real.  As Robert Lighthizer titled his book: “No Trade Is Free.”

Give us the state of play on USMCA. How does an annual review even work?

USMCA is a 16-year agreement with a review built in at year six, and that six-year trigger was itself a compromise, since Trump and Lighthizer originally wanted a shorter, roughly five-year sunset that would force constant renegotiation and preserve leverage. This summer we hit the six-year mark, and each party had to say whether to lock the deal in “as is” for another 16 years. The U.S. declined, which shouldn’t have surprised anyone. Declining triggers a joint review that runs annually through a 2036 backstop, or until a year when the parties agree to lock back in for, presumably, another 16 years (with a new six-year mark trigger). A key point here is that nothing about tariff treatment, rules of origin, or dispute mechanisms changed on July 1.  But those things can be changed in the now ongoing negotiations. It is not likely that the U.S. would negotiate any changes so significant that any member country has to adopt legislation, so we are mostly talking here about administrative and interpretive changes.

What’s the dynamic among the three countries, and why is the President reopening his own deal?

Both Canada and Mexico are impressive negotiators.  A lot of people do not know that the only way the USMCA got done in 2018 was because the U.S. walked away from Canada, betting that moving ahead with Mexico alone would bring the Canadians back.  In the end, it worked.  You will also hear Ambassador Greer say that the two relationships (U.S./Mexico and U.S./Canada) are so different it’s almost strange we treat them as one.  Canada is largely energy and raw inputs like crude, natural gas, and electricity, so it’s really about taking advantage of cheaper energy there.  Mexico is more manufacturing and assembly.  If manufacturing is your concern, and clearly that’s true for this administration, Mexico is the bigger spoiler, which is why rules of origin and labor rules get the attention.  As for why the President is renegotiating the deal:  roughly three-quarters of Canada’s exports and around 80% of Mexico’s come to the U.S., so the leverage is ours.  But more importantly, again if you listen closely to the key trade officials in this administration, the President sees a growing deficit with Mexico — the partner that actually has the manufacturing — and a “gentlemen’s agreement” on steel and aluminum that hasn’t really been honored.  When he looks at those outcomes, he wants a different outcome.

Tariffs have a lot of moving parts — different rates, some expiring, some litigated. Help us make sense of the landscape, and who’s actually driving it.

Think of it as a four-part structure. First, the country-by-country “reciprocal” tariffs from April 2025 — Liberation Day — scaled to the size of our deficit with each partner; those were the IEEPA tariffs. Second, national-security tariffs under Section 232 on steel, aluminum, autos, and some pharma and semiconductors. Third, Section 301 tariffs tied to specific unfair-practice investigations like overcapacity or forced labor. Fourth, carve-outs layered on top of all of it (meaning you can pull some products or categories back out). These all rest on very different legal footing, which is the whole ballgame for how durable each one is.  To me, who’s shaping it is the most interesting discussion. Congress has largely sat this out.  Cue the sad-violin music on the rise of the administrative state or executive branch authority. The administration has been happy to drive on.  The only real check has been the courts: the Supreme Court struck down the IEEPA tariffs earlier this year, while the Section 232 and 301 layers, built on firmer long-standing authority, remain in place.  Litigation continues, so expect this to keep moving.

Closer to home — where is North Carolina positioned to win?

The clearest winner is pharma and biotech. USTR itself points to “concrete in the ground” on new pharmaceutical facilities in North Carolina backed by Swiss, Danish, French, and Japanese firms, which plays directly to RTP and beyond.  Aerospace is another: the 1979 Civil Aircraft Agreement’s zero-for-zero treatment survived in the new deals, and aerospace is one of the few sectors where the U.S. is a clear net exporter.  The Triad’s work in assembly, engines, and MRO sits on the right side of that.  And import-competing domestic producers obviously benefit from the Section 232 wall as long as they don’t themselves need too many inputs that are imported and subject to tariffs.

And where is the state most exposed?

A few places. Agriculture tied to China — soybeans, pork, poultry, tobacco — though trade policy isn’t the only driver there; South America has vastly improved its infrastructure and undercuts us on cost so some of the shifts we see in agriculture are relative to longer-term changing markets and competition, not trade policy. The most ironic loser is manufacturers who still produce here but import their inputs or equipment, because the tariffs end up squeezing the very firms they’re meant to help, while a competitor in Canada or Mexico shipping in duty-free under USMCA feels no such pinch.  Of course, duty-free under USMCA may be taking a back seat right now with tariffs imposed as a result of the failed negotiations with the Canadians.  Textiles and furniture are genuinely mixed — protection on one hand is arguably helpful, but higher input costs and retaliation risk on the other hand can be painful.  On autos, I’d actually call it a push, because the story is different depending on the player.  Toyota’s battery plant seems to be going well, but I would argue that is as much an Inflation Reduction Act play as it is pure trade policy induced.  Compare that to the VinFast situation, which is obviously more troubled.

How should businesses navigate all of this?

Four things. First, accept that the uncertainty isn’t going away.  But the pressure to make deals that are beneficial is useful, and on USMCA specifically, neither Mexico nor Canada has much leverage, so it’s really the U.S. business community that can push this to a good outcome. Second, get technically smart: know who pays, what happens if goods are stranded, what a new emergency declaration would do, and how refunds work.  Expect more from the NC Chamber on these issues in the coming weeks.  Third, and I’ll admit I’m not fully qualified to make this call, it sure seems that the Western Hemisphere may simply be the safer bet for supply chains. And fourth, use the process, lean on partners like the NC Chamber, and root for USMCA to eventually be extended.

For more on what the USMCA review means for North Carolina’s economy and business community, read the NC Chamber Foundation’s USMCA at the 2026 Review: What North Carolina Businesses Should Know.