Pacheco: What the global economy needs most in 2026

At the end of every year, I create a wish list of items for the new year that I would like to see resolved throughout the world, or at least considered. And even though I don’t have a magic wand to directly affect these items, I think bringing them to the public’s attention is well worth the effort. Here is my wish list for 2026.

First, the wars in Ukraine and Gaza have been going on too long, and too many lives and units of economic production have been lost. The Russia-Ukraine war started in 2014 with Russia’s occupation of Ukraine’s Crimea region. It followed this up with a full-scale invasion of Ukraine in February 2022. Hundreds of thousands of lives have been lost on both sides, and economic destruction has been shared by not only the parties at war but also by allies and trading partners.

The war has caused disruptions of trade flows in and out of Russia and Ukraine. Russian oil is not being delivered at the levels that it was before its invasion. Ukraine, often referred to as the “breadbasket of the world,” is not seeing its commodities, such as wheat, being produced and exported as they were before the start of the war. 

Imagine how the many billions of dollars that have been spent globally on this war could have been spent to advance economic development and human causes. And if the war finally does stop in 2026, what has been gained by either side that supersedes what has been lost? 

Russia’s Vladimir Putin has made his country a pariah in the West and pushed two new European nations into NATO — exactly what he had intended not to do. Ukraine will face years of reconstruction of cities, infrastructure, and most importantly, lives.

In Gaza, a delicate ceasefire continues to hold for the war that started in October 2023 between forces representing Hamas and the Israeli government. However, given the history of this region, this could all be wiped out in an instant, and both sides could resume firing at each other. Countless amounts of investment will be needed to rebuild Gaza, and no party has proposed a concrete plan for doing so. 

It is amazing that such a small part of the world can negatively affect the rest of the globe and cause divisiveness among world powers. What is apparent is that putting back together the pieces in the Middle East is going to again be put on the plate of the forces of the world, including the U.S. As in the past, this will again involve time and money that could be used elsewhere.

In July 2026, the official five-year review of the U.S.-Mexico-Canada-Agreement, or USMCA, will begin. This review between the signatories can range from a simple tune-up of the agreement in specific areas to abandoning the agreement altogether. I am very apprehensive about this review, given how the Trump administration tends to treat what are considered traditional economic allies. 

I am worried that the continuation of the USMCA will be tied to non-economic factors such as immigration and trade. These two factors do not easily fit into what can be considered a simple trade agreement, whose main purpose is to increase trade among the partners by decreasing barriers in order to form a North American trade bloc, nor can they be easily measured.

Part of my apprehension is the Trump administration’s eagerness to threaten or to use tariffs in a punitive fashion in order to attempt to get its way. I would hate to see the U.S. go into the USMCA review threatening to impose tariffs on Mexico and Canada if they don’t totally concede to all U.S. demands, even if unreasonable. A review of the agreement is a review of its effectiveness and areas that can be improved. It is not a renegotiation, which is what occurred five years ago. 

Friction, the threat of tariffs, and/or other unforeseen factors could undermine the effectiveness of the USMCA. This, in turn, could decrease the attractiveness of North America as a place to locate production and to direct investment. This will lead to a decrease in jobs in North America and continued economic uncertainty.

I also would like to see the topic of tariffs in general fade away. The imposition of tariffs has caused economic disruption and inflation in the U.S. The U.S. tariff war on China was a total failure and showed that China holds some strong cards against the U.S. if it liberally imposes tariffs without thinking of the consequences. 

Another sign that tariffs have not worked is the announcement by the Trump administration of a $12 billion aid package to farmers who have been negatively affected by tariffs imposed upon U.S. agricultural exports by other countries that the administration has attacked with tariffs on their goods. The U.S. would not have to be propping up farmers and ranchers if tariffs were working.

History has taught us that getting into tariff wars becomes a race to the bottom that neither side wins. In the post-WWII era, the U.S. and the Western world have been committed to free trade as a method by which trade ties can be increased, alliances can be formed, wealth created and wars averted. 

Countries that strongly trade with each other do not go to war with each other. The animus and uncertainty caused by starting a tariff war put the U.S. on the road to fractured relationships and isolationism. In order to be stronger in the world, the U.S. must be globally active and connected to the rest of the world through trade.

Jerry Pacheco is the executive director of the nonprofit International Business Accelerator. He can be reached at (575) 589-2200 or jerry@nmiba.com.