The International Trade Commission released its estimate of the economic effect of revisions to NAFTA, one of the steps necessary for a vote in Congress under Trade Promotion Authority. Because there are few tariff changes in the U.S.-Mexico-Canada Agreement, economists focused on the advances in digital trade and job growth due to tighter auto rules of origin. Across the economy, the ITC estimated that ratifying USMCA would lead to an additional 176,000 jobs, a 0.12 percent increase.
USMCA
The U.S.-Mexico-Canada agreement is a free trade agreement between the three countries, also known as CUSMA in Canada and T-MEC in Mexico. Replacing the North American Free Trade Agreement (NAFTA) in 2020, the agreement contains a unique sunset provision where, after six years (in 2026), any of the three parties may decide not to continue the agreement in its current form and begin a period of up to 10 years where USMCA provisions may be renegotiated.
The International Trade Commission estimated that by the sixth year after the new NAFTA's ratification, the U.S. economy would have 176,000 more jobs than it would have without the new revised trade deal. That's a 0.12 percent increase compared to the status quo.
Former Rep. Joe Crowley, who is serving as an honorary chairman of Pass USMCA, did not endorse the pre-August timeline that Republican House members have been saying is critical to passing the U.S.-Mexico-Canada Agreement. But Crowley, who was defeated in a primary by Alexandria Ocasio-Cortez last year, said, "I think time is of the essence. I don't think we have forever to do this."
Toyota does support the renegotiated NAFTA, a top executive said at a trade conference in Washington, even though it will require the company to change some of its sourcing to meet the new 75 percent autos rule of origin. Doug Murtha, vice president of corporate strategy and planning for Toyota's North American division, said that the addition of $3 billion in U.S investments were, "to some extent, changes we had to make for USMCA."
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, told reporters that if President Donald Trump were to hike tariffs in violation of what was negotiated in the U.S.-Mexico-Canada Agreement, as he threatened to do, it could blow up the treaty. "More tariffs would create more problems," Grassley said April 10, and he noted the steel and aluminum tariffs are already a major obstacle. "The Congress of the United States won’t bring up that agreement until the tariffs are off," he said.
The Border Trade Alliance is lobbying lawmakers this week for U.S.-Mexico-Canada Agreement ratification. “While we certainly wish the disruptions at the border weren’t occurring, they have shined a bright light on the importance of cross-border trade to the health of the U.S. economy,” BTA board chair Paola Avila said. The Alliance says the USMCA makes "major and important" upgrades to NAFTA, including in the areas of e-commerce, intellectual property protection and enhanced agricultural access.
The United States-Mexico-Canada Agreement contains the most complex automotive rules of origin of any trade deal, significantly raising rule requirements for the industry and steeply increasing costs for compliance programs, several experts said at an April 4 Center for Strategic and International Studies panel. Several industry leaders said the USMCA will force many companies in the automotive supply chain to make substantial changes. “The USMCA rule of origin is now by far the most complex, stringent requirement that exists in any free trade agreement in the world,” said Matt Blunt, president of the American Automotive Policy Council. “It really will force manufacturers to think more about the rule of origin and their sourcing decisions than they’ve ever done before.”
President Donald Trump denied he said Mexico has a year to improve drug interdiction (see 1904040030), but, for the second day in a row, he suggested Mexico is improving its control of migration, so he won't need to close the border soon. "I don't think we'll ever have to close the border because the penalty of tariffs on cars coming into the United States from Mexico at 25 percent will be massive," Trump told White House reporters a few hours after he made the one-year remark, on April 4.
President Donald Trump’s threats to close the southern border to force Congress to pass comprehensive immigration legislation have multiple trade groups warning of dire economic consequences if the administration follows through. The mere threat of a border shutdown is causing “uncertainty” in U.S. retail supply chains, the National Retail Federation said.
Canada's top diplomat in Detroit, Consul General Joe Comartin, said the Canadians used to get assurances, whether from politicians or the Office of the U.S. Trade Representative, that the tariffs on its steel and aluminum exports were going to come off soon. "We're not even getting those assurances anymore," he told International Trade Today March 27 in an interview. "We're just not seeing any movement on this side on the tariffs."