The USMCA (United States-Mexico-Canada Agreement) has been settled after about a year of negotiations and revisions following President Trump’s first draft. The trade deal replaces NAFTA, which had been in effect since 1994, and therefore needed updating, for example, in the area of e-commerce.
The agreement will oversee $1.2 trillion of trade.
Among the changes that are mandated in the new deal, these are a few that you should probably know about:
cars and trucks
Now, at least 30% of the work done to assemble a car or truck needs to be done by workers making at least $16 per hour. By 2023, at least 40% of that work must be done by workers earning that much.
And, to qualify for zero tariffs, a car or truck must now have 75% of its components manufactured in Canada, Mexico or the United States, which is an increase from 62.5%.
Hint: The Jeep Cherokee, built in Belvidere, Illinois, is number one for being the most American-made auto, with about 72% of its parts manufactured domestically.
It’s possible that the mandate for higher wages for auto workers as well as the “origins” rule will result in auto price increases.
Mexico is being forced to change its laws to make it easier for workers to unionize, which should cause Mexican wages to increase, which should mean fewer companies will build factories in Mexico because of cheap labor, which should keep more jobs in the US. That’s the hope.
U.S. farmers can now sell (some) dairy products to Canada. Previously, Canada had very tight controls on their domestic dairy market.