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Alphabet soup: New USMCA to replace NAFTA

October 5, 2018
The pending United States-Mexico-Canada Agreement is expected to affect the auto industry most, requiring a greater portion of vehicles to be made in North America and establishing a minimum fixed wage level for car manufacturers of $16 an hour.
The USMCA, which would replace the North American Free Trade Act, also includes a concession by Canada to effectively cap its automobile exports to the U.S.
For Ford and General Motors, the agreement announced Sept. 30 likely comes as a relief after President Donald Trump threatened in May to tax all auto imports in an attempt to safeguard national security.
Tariffs would have been a negative for both manufacturers, according to Moody’s analysis, since 30 percent of GM’s U.S. unit sales depend on imports from Mexico and Canada, while 20 percent of Ford’s domestic unit sales depend on such imports.
Trump touted the new deal as "a new dawn" for the U.S. auto industry. Canada, America’s second largest trading partner, was left out when the U.S. and Mexico reached a preliminary deal in late August to revamp NAFTA.