Trump, Trudeau, Nieto Sign USMCA
By Dan Markham
on Dec 5, 2018
The United States-Mexico-Canada Trade Agreement was signed by the leaders of all three countries during last week’s G20 Summit. The new, less-easily pronounced NAFTA looks to be exactly what the U.S. manufacturing community was looking for in these renegotiations – a minor update of the original agreement.
One of the areas where the industrial economy and President Trump disagreed these past two years was on the efficacy of the North American Free Trade Agreement. From steel mill owners to distributors on to end users, the general sentiment was that NAFTA had been a good deal for the U.S. manufacturing base. And rather than the wholesale changes the president claimed to want, mere tweaks to the quarter-century-old pact would suffice.
And that seems to what the new agreement has given us. The major changes involve rules of origin increases on automobiles to be considered for duty-free passage and some tougher labor provisions that will be felt most acutely by Mexican manufacturers. The crux of the agreement that allowed for a three-country supply chain to emerge is intact.
Of course, two hurdles remain. The deal does not exempt Mexico and Canada from Section 232 tariffs on steel and aluminum, to the consternation of the two countries (and the domestic aluminum industry). That will likely need to be resolved before those two countries ratify the deal.
At home, the outlook may be murkier. Congress will have to approve the deal for full ratification, and the change in power in the House of Representatives could prove troublesome. We won’t know until 2021 whether the new NAFTA is officially the new NAFTA.