G3

Following the previous newsletter on the G2, this edition could have explored the complex relationship between the US, China, and the EU—the world’s three largest economic powers. However, the EU is neither a single nation nor a true federation, and its influence beyond economic and financial integration remains limited. Moreover, these three economies represent distinct regional blocs that are geographically distant from one another.

Instead, this newsletter will focus on a more cohesive G3: the three countries of North America. At the center is the United States, Canada to the north and Mexico to the south. In a time of significant change, we will explore the evolving diplomatic dynamics within this continental trio.

A QUICK HISTORY: The G3 and Its Inner Borders

North America is a vast expanse framed by two majestic oceans, bordered by the Arctic Circle to the north and the jungles of Central America to the south. At its center lies the United States, flanked by two enduring neighbors: Canada and Mexico. Two major mountain chains, the Rockies in the west and the Appalachians in the east—both originating in Canada—shape the geography of this continent. Between them stretches the central plain, a remarkable feature of the G3, crisscrossed by navigable waterways linking the Saint Lawrence River in Canada to the Gulf of Mexico via the Great Lakes, the Ohio, and the Mississippi Rivers.

Long before today’s borders were drawn, the original inhabitants—the Indigenous tribes who called themselves “the Human Beings”—traveled, traded, and raided across vast distances, likely using those same waterways. Archaeological sites like the Ohio River mounds have revealed fascinating finds—grizzly teeth alongside shark teeth—evidence of long-distance trade networks. These societies didn’t require currency; instead, diplomatic gifting was a well-established tradition when entering another territory—long before tariffs were ever conceived.

The Europeans arrived in the 1500s: the British in Virginia, the French in Canada and the Northwest (Montpelier, the capital of Vermont, is named after the city in southern France where I am from), the Dutch in what is now New Jersey, New York, and Pennsylvania, and the Spanish in Florida. While these colonial powers struggled for dominance on the eastern seaboard—it took 250 years to cross the Appalachians—the French expanded westward, linking Canada to the Gulf of Mexico through a vast territory known as French Louisiana. At the time, Mexico was part of the Spanish Empire and included much of today’s western Texas.

By 1803, the French had lost Canada to the British but had played a crucial role in helping the U.S. gain independence. By then, the U.S. had reached the Great Plains. That same year, the Louisiana Purchase was made when Napoleon sold the Louisiana Territory to Thomas Jefferson for $15 million, doubling the size of the United States and adding parts of fifteen present-day states to its domain. The “Manifest Destiny” to conquer the West had begun. It was during this era that the geographic outlines of the G3—Canada, the U.S., and Mexico—began to take shape.

Interestingly, it took longer to secure the northern and southern borders than to reach the Pacific. Fast-forward past Mexico’s independence from Spain in 1821, Texas’s independence in 1836, and its U.S. annexation in 1845, and arrive at 1846. That year saw two major events: the Oregon Treaty between Britain and the U.S., which set the 49th parallel as the U.S.-Canada border west of the Great Lakes—marking the U.S.’s failure to expand further north—and the U.S. declaration of war on Mexico. The war ended in 1848 with the Treaty of Guadalupe Hidalgo, which transferred present-day California, Utah, Arizona, New Mexico, and Nevada to the U.S.—many of them border states today.

This period also saw the emergence of revolutionary technology: the Colt revolver, famously wielded by the Texas Rangers, transforming cavalry warfare. Another lesser-known outcome of the Treaty of Guadalupe Hidalgo was the U.S. commitment to defend Mexico from Comanche raids.

The Indigenous tribes suffered immensely during this expansionist era. Eastern tribes such as the Cherokees and Delawares were forcibly relocated to the Great Plains, where they joined or clashed with the formidable Plains tribes. The Plains Indians were unlike any others—perhaps because of their mastery of the horse, introduced via Mexico. The Lakota, Sioux, and Cheyenne formed powerful alliances near the U.S.-Canada border. In the south, the Comanche Empire (see Pekka Hämäläinen’s work) dominated for nearly 150 years, blocking French western expansion and Spanish northern ambitions.

The Comanche planned raids up to 1,000 miles into Mexico, striking under cover of night, taking hostages, weapons, and horses. It took waves of disease, near-extinction of the buffalo, a decade-long drought, and brutal winters to weaken them. After the Civil War, General Sherman—the same who burned Atlanta—was sent to the Plains to deal the final blow. The Comanche had created a complex, cross-border network of trade and diplomacy. One thing was clear: if you wanted to trade on Comanche land, there was a tariff—and you’d better bring gifts. Borders or not, the southern frontier has always been porous to both goods and people.

In the north, Canada achieved independence from the United Kingdom in 1931, marking the birth of a new nation with a unique dual heritage. “Je me souviens” (“I remember”) is a lasting testament to this blend of English and French legacies—a fusion even William the Conqueror and Edward III could never achieve.

This, truly, is the birth date of the modern G3. And for the most part, little would change in this trilateral relationship—until 1994.

A NEW WORLD ORDER

The 1990s was a strange and transformative decade, ushered in by the collapse of the USSR and the first Gulf War. In the wake of Iraq’s invasion of Kuwait, a broad international coalition came together to reverse the aggression—symbolizing a new era of global cooperation. On March 6, 1991, President George H.W. Bush delivered his now-famous address to Congress, proclaiming the dawn of a “New World Order”: a world at peace, safeguarded by internationalism.

Few moments embodied internationalism better than the 1992 Maastricht Treaty, which transformed the European Economic Community into the European Union. The EU began integrating not only Western nations but also former Eastern Bloc countries, expanding its powers beyond economics to allow for the free movement of people across borders.

It felt like the Cold War was truly over. Many, myself included, believed that peace was finally here to stay. The 1990s were also marked by two revolutionary technological breakthroughs: the Internet Protocol (IP), which enabled machines to communicate and gave rise to the World Wide Web (Web 1.0), and the mobile phone, which allowed people to talk to one another anytime, anywhere.

The East had been defeated. The West enjoyed the peace dividend, slashing defense budgets and taming the military-industrial complex. Space was used to transition and became a symbol of peaceful cooperation. I am glad that like many of you I took part in this transformation. Nothing illustrated this better than the International Space Station that was conceived and its first modules, Zarya and Unity, launched during this decade.

With a world at peace and globally connected through data networks and mobile voice, the planet began to feel like a village and the Earth appeared flat. Global trade wasn’t just about goods anymore; it was about trading factories for cheap labor, and services for industrial production. Developed nations pivoted toward services, especially digital services, while offshoring manufacturing to lower-cost countries.

This was the beginning of globalization—and for North America, it was embodied in The North America Free Trade Agreement, NAFTA, which came into force in 1994.

NAFTA: The North American Response

While the Maastricht Treaty created the world’s largest economic zone, with over 500 million consumers, the United States needed to respond. Integrating Canada and Mexico into a North American free trade zone of comparable scale was a strategic move.

At its core, NAFTA was designed to export industrial jobs and factories to Mexico, fully leveraging the Maquiladora system, import goods and resources (especially energy and minerals) from Canada, and export services to both partners. Services—engineering, legal, marketing, finance—were seen as the high-value future of a knowledge-based economy. They were intangible, easily digitized, and effortlessly transported via the web. Supposedly, their value outweighed industrial goods in trade terms, and they were expected to absorb displaced blue-collar workers with minimal retraining.

The geographical advantage was clear: a single landmass with robust trucking, rail, and highway networks, especially across the Great Plains corridor. But the reality was more brutal. NAFTA contributed to the closure of approximately 100,000 factories in the U.S., and the loss of 800,000 industrial jobs—along with 7.4 million additional jobs indirectly supported by that sector.

Some argue that automation played a role—and we’ll revisit that—but in the 1990s, Mexican labor was so cheap that it didn’t make economic sense to automate U.S. factories. In comparison, the “China Shock” of the following decade, triggered by China joining the WTO in 2002, led to the loss of 2.8 million industrial jobs and a total of 3.7 million U.S. jobs. Still, NAFTA’s impact was deeper and more immediate.

The trade deficit tells the story. The U.S. deficit with Canada—driven largely by direct and indirect energy imports—hovers around $64 billion. But with Mexico, the deficit has soared to $172 billion, second only to China’s $300 billion. These stark figures underscore a simple truth: the service sector carries less financial weight than manufacturing. In economic terms, the bit is still lighter than the atom.

NAFTA benefited corporations, enabling them to shed labor-intensive operations, slash manufacturing costs, and boost margins and stock valuations. But what was promised to trade unions under President Clinton—adaptation and new opportunities for displaced workers—largely failed to materialize. Blue-collar communities in the Rust Belt were decimated and have yet to fully recover.

Today, nearly 6 million trucks cross the Mexico-US border annually, transporting industrial and agricultural goods. But many also carry something else: illegal drugs such as fentanyl—often produced in Mexico using Chinese precursor chemicals—and undocumented migrants smuggled across the porous border.

Beyond trade imbalances and job losses, the border has become a national security concern. NAFTA inadvertently revealed a critical flaw: it is nearly impossible for neighboring countries to maintain a free trade agreement while simultaneously enforcing strict migration controls. Under the Biden administration, this issue has only worsened, with cross-border migration spiraling out of control.

DESIGN, BUILD, AND AUTOMATION

Technology relies on engineers—both for design and for production. In the 1990s, the West had just absorbed the hard lessons of Japanese manufacturing excellence. Concepts like Taguchi methods, Kanban, and Total Quality Management reshaped engineering education and corporate practice. Design and manufacturing were no longer separate silos, but integrated disciplines aimed at delivering quality and cost-efficiency.

In this context, despite the rise of IP networks and mobile communication, geographically and linguistically separating design and production felt counterintuitive to most engineers. Yet when Steve Jobs told President Obama that the iPhone could only be manufactured in China—even though it was designed in California—the president accepted it as a new economic reality. Globalization had become a theorem.

Then came COVID-19, which exposed the vulnerabilities of this global supply chain. Some challenged this orthodoxy. They were engineers not politicians or policy makers. Unlike Silicon Valley’s dominant culture of software-driven businesses (which don’t face production challenges at all), they insisted on vertical integration and agile development. For them, separating design from manufacturing was not just inefficient—it was absurd. Telsa proved it: high-quality cars could be designed and built in the U.S. and successfully exported again.

Silicon Valley is now embracing the mantra “design and build” once more. The modern factory is not just a place of production, it is a product in itself. It must be conceived with the same rigor as the products it makes, integrating Industry 4.0 principles: robotics, AI, private 5G networks, and energy-efficient systems.

It’s worth noting that automation wasn’t new when globalization took off in the 1990s. Fully automated factories already existed. My first engineering job in the late 1980s was planning preventive maintenance for the Perrier bottling plant in southern France—a facility that was already fully automated. But those systems handled relatively simple tasks. Today’s automation is far more sophisticated.

By 2024, automated factories are often more cost-effective than outsourcing production to low-wage countries. Manufacturing 4.0 envisions robot “workers” with humanoid mobility and dexterity and onboard AI, capable of performing complex tasks. Reshoring production won’t bring back the old jobs—but it will enhance productivity, protect labor rights abroad, and reduce environmental costs by cutting global transport. It’s not about returning to the past—it’s about moving forward with smarter, more responsible industry.

TRUMP RETURNS

President Trump is now imposing tariffs all around the planet challenging the “new world order” from thirty years ago and the foundations of globalization including the existence of the WTO. Canada and Mexico are also targeted and blamed for the uncontrolled immigration and drugs infusion.

Globalization was not born out of malice. NAFTA was America’s first step into this new global era. The logic was compelling: To the satisfaction of the political right the private sector would gain access to larger markets, cheaper labor, and more favorable tax regimes (like Ireland’s). Meanwhile, shipping and energy costs were declining, allowing unprecedented growth and profitability.

On the political left, globalization promised to reduce global poverty by redistributing wealth through the flow of capital, goods—and people. Behind this ideal was a quiet acceptance of demographic gravity: people, like water, move from poor regions to richer ones. If integrated successfully, they would also reshape electoral dynamics. Cheap imports would relieve the financial burden on lower-income populations. Hard labor jobs would disappear, but high-value jobs would emerge in their place.

For this win-win theory to succeed, both sides were willing to overlook growing signs of trouble: transnational crime, social dumping, labor abuse, environmental degradation, growing trade imbalances, and a ballooning U.S. deficit.

For thirty years, globalization was the doctrine—dogma even. And it worked—for many. China thrived, becoming the poster child of the global system. U.S. corporations flourished. The EU expanded but not as much. Underneath, cracks widened. The U.S. trade and budget deficits and debt soared. Inequality deepened. The COVID-19 pandemic may have accelerated awareness, but the roots of the problem ran deeper.

The first real political challenge to the dogma came during Donald Trump’s first presidency. Ironically, while Trump’s rhetoric was framed in right-wing nationalism, his policies resonated with many on the left. For those whom globalization had failed, pulling back from it felt like a long-overdue course correction.

It is too early to say if Trump’s challenge to the system does benefit the U.S. , however, it coincides with a shift in global dynamics. America outpaced the EU. China did too. Many developing nations found new footholds in manufacturing. But globalization had also concentrated wealth to an extreme: today, 2% of Americans own 50% of the nation’s wealth. Just as in astrophysics, mass attracts mass—until the star collapses under its own gravity.

Trump’s election was not the cause of this shift; it was the result. He gave voice to those left behind. Rejecting globalization, in that light, is not a right-wing reflex—it is perhaps a left-wing one.

G1 or G30 AT THE AGE OF AI

The G3—Canada, the U.S., and Mexico—stands at the heart of this transformation initiated by the US. It is unique in combining free trade without free movement of people. The dual challenge of re-industrialization— driven by automation— and the disruptive impact of AI on service-sector jobs presents a formidable test for the economic and social systems of the G3. How it navigates this next chapter will offer important lessons for the rest of the world. And who knows, if size really matters, the G3 and the G27 (the EU) could combine in a G30 around a multidimensional agreement,  just to balance China.