Can North America Unite Against China's Energy Dominance: A Path to Shared Prosperity and Geopolitical Strength
The United States-Mexico-Canada Agreement (USMCA) is set to undergo a critical review in 2026, and the resulting policies could significantly impact global energy markets and value chains. Despite the apparent political tensions and divisions among the United States, Mexico, and Canada, their shared strategic priorities offer a compelling opportunity for collaboration. Strengthening energy trade and mutual support in energy production and localized supply chains could benefit all three nations, but it will demand significant efforts, particularly from Mexico.
The Atlantic Council, a renowned bipartisan think tank focused on international coordination and security, has released a comprehensive 14-page policy brief advocating for enhanced cooperation among North American nations to compete with China in global energy value chains. China's increasing consolidation of global supply chains and its significant control over international energy markets, especially in emerging economies, poses a challenge. The Council argues that North American nations must course-correct and return to convergence, coordination, and cooperation to counter China's dominance and emerge stronger together in a rapidly evolving global market.
While the U.S., Mexico, and Canada have experienced political entanglements and contentious debates during the Trump administration, their economies remain deeply interdependent. Smoothing over trade tensions is essential, given their intricate political and economic ties. Despite China's unmatched energy spending and rapid expansion of energy influence, supply chains, and investments in emerging economies, the Atlantic Council believes that North America is well-positioned to challenge China's dominance if it leverages its historical strengths.
The October policy brief highlights North America's energy abundance, with the United States leading global LNG exports, Canada supplying critical oil and gas resources, and Mexico's emerging Pacific Coast LNG projects providing direct access to Asian markets. This collective export capacity fosters shared prosperity through export revenues and offers democratic allies alternatives to authoritarian energy suppliers, transforming energy integration into a geopolitical asset.
This strategy relies on Mexico's ambitious energy planning, including the Plan Mexico policy, outlined by President Claudia Sheinbaum. Mexico is crucial to the U.S. and Canada's nearshoring ambitions, aiming to shorten and strengthen localized supply chains for energy security, independence, and sovereignty. Additionally, Mexico has vast untapped potential for green energy production, as emphasized by the Ember Energy organization.
The Atlantic Council emphasizes that Plan Mexico's focus on manufacturing growth, critical mineral development, and energy security aligns with U.S. and Canadian interests in building more resilient regional supply chains. Increased North American energy cooperation is vital to maintaining Mexico's alliances with the North rather than shifting its focus eastward. China's rapid expansion in Latin American energy sectors makes Mexico a strategic trade partner for Beijing, and isolating Mexico from North American cooperation could lead to disastrous consequences for the continent's policy and economic goals.
In summary, the USMCA review presents an opportunity for North America to unite against China's energy dominance, fostering shared prosperity and geopolitical strength. By leveraging their collective strengths and addressing Mexico's critical role, the region can navigate the challenges posed by China's influence and secure a more resilient and prosperous future.
