The United States of America and Canada have agreed to reach a last-minute deal to revise the North American Free Trade Agreement, if approved by Congress and ratified by both Mexica and Canada the “United States-Mexico-Canada Agreement (USMCA)” as its now called will have a significant impact on different industries.
CarMakers – One of the biggest is expected to be on carmakers, which are widely traded among the three countries. Under the new terms, more cars will have to be made in North America using high wage labour, otherwise, the car will face duties when it crosses the border. Now, this puts Detroit car makers in a good spot as they can source parts from the U.S.A or other high wage areas, however, it will be a strain on Mexico where the cost of labour is low and where global automakers have a bigger presence.
Agriculture – The next big thing of the USMCA is agriculture and its good news for American farmers. The new agreement will likely preserve the 10’s of billions of dollars in currently traded farm goods like corn and grain, it should also prompt the three countries to remove barriers against each other agricultural products.
Canadian Concession – In a concession by Canada, U.S dairy farmers got at least a part of what they asked for- the removal of a complex quota and pricing system that limited the export of certain U.S dairy products. It’s an agreement that will likely be praised by some U.S states but could have some political strain in Canada.
New Inclusions – Unlike the 1994 agreement “NAFTA” both financial services and digital businesses will now be included, things like Youtube, Hollywood, Drugmakers and Wallstreet will all benefit from the new deal.
The new agreement does not resolve all the issues. The Trump administration tariffs on steel and aluminium that took effect in June are still in place, changes to those are ongoing and will be addressed separately