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NAFTA Replacement Deal Reached

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North America’s three leading economies have reached an agreement on a replacement for NAFTA. The United States-Mexico-Canada agreement was announced Sunday evening by the Trump administration.

The pact follows the bilateral trade deal struck by the U.S. in Mexico last month. This trilateral deal can be sent to Congress for approval. There is uncertainty when Congress will vote on it. 

Under the USMCA, steel and aluminum tariffs will remain in place on imports from Canada and Mexico, as well as the retaliatory duties those countries have placed on U.S. agricultural goods and other products. Senior administration officials indicated there would be further negotiations aimed at resolving those issues, but did not say when.

Steel Manufacturers Association President Philip K. Bell said his organization appreciates the efforts of U.S. Trade Representative Robert Lighthizer, Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Secretary of Economy Ildefonso Guajardo to update NAFTA. 

“The USMCA represents a 21st century approach to trade relations in the region,” he said, adding that SMA is pleased changes in the rules of origin and automotive content requirements. “We believe this is a key part of the modernization of the agreement and these new provisions will help promote the production and use of domestic steel. The SMA stands ready to assist the administration with the conclusion and implementation of this agreement, and we encourage swift Congressional approval."

Thomas J. Gibson, president and CEO of the American Iron and Steel Institute, said the new trade agreement will keep manufacturing supply chains throughout North America strong.

“We appreciate the administration’s hard work to reach this trade agreement between the U.S., Canada and Mexico – especially regarding measures that ensure North American steel continues to be used in automobile production,” Gibson said. “We are pleased that the agreement is trilateral, as the relationship between our three countries has been extremely beneficial for the steel industry and resulted in robust trade and investment in the region over the past 25 years.” 

However, the Aluminum Association expressed dismay with the USMCA. President and CEO Heidi Brock said her organization is disappointed that the Section 232 aluminum tariffs were not addressed as a part of the new trade agreement.

“Now is the time for the United States to work with Canada and Mexico to provide a full exemption – without quotas – for aluminum imports from those countries,” she said. “This should occur as soon as possible, and certainly before the final agreement is signed.”

According to Brock, integrated supply chains in North America are one reason the U.S. aluminum industry has been able to meet growing demand year over year. She warned that creating barriers within this supply chain will threaten continued U.S. growth and investment.

“The current Section 232 tariffs are hurting U.S. aluminum companies – making them less competitive on the world stage,” Brock said. “Fully 97 percent of domestic aluminum industry jobs are in mid-and-downstream production and processing. By artificially raising input prices and constraining metal supply, tariffs and quotas risk harming demand, growth and investment in the United States. We will continue to review the specifics of the agreement and work towards tariff- and quota-free trade of aluminum with our North American trading partners.”




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