Since his days as a Presidential candidate, President Trump talked often about NAFTA and his views on the deal. His position was always controversial, drawing in criticisms from both sides including people in his own party that disagreed with Trump and his isolationist tendencies and leanings towards disrupting free trade. Many criticized his repeated attacks on the trade deficit and saw it as a position that threatened the way the markets between the three North American partners functioned. In October of last year the new deal finally came out and although still pending approval in the respective countries, it seems it is the final draft of a policy the President fought hard to revise.
So what exactly has been the main change in NAFTA? First and foremost the deal is no longer referred to by that name. Instead, the new negotiation will be known as United States-Mexico-Canada agreement or USMCA. According to the Washington Post, one of the bigger changes in the deal is the provisions particularly affecting the auto industry.
There was a lot of talk about this aspect of the deal, as candidate and later President Trump spoke admantely about bringing these auto factory jobs back to the States. The new deal aims to have more auto parts manufactured in the United States. Starting in 2020, in order to qualify for zero tariffs, cars and trucks must have 75% of its components made in the U.S. Many argue that this will lead to a rise in the price of smaller vehicles and therefore take production elsewhere.
The President often threatened both Mexico and Canada with hefty tariffs on automobiles, but the deal assures both countries that this will not be the case and only anything above the quota might receive the tariffs.
For now, the steel tariffs will stay in place. Canada was trying to renegotiate this, as it is a 25% tariff on Canadian steel. Another unrelated yet ever-growing important field, the USMCA also deals with intellectual property rights. Thanks to the fast flow of ideas and information, it is often hard to keep track of this type of property but the deal contains more stringent protections for patents and trademarks.
In large part the deal allows trade to continue between the three countries. For the
Before all of it goes into place, however, the legislative bodies of all countries have to approve the measures and put it into place. During this time it is likely that some changes might be made to the agreement and some final resolutions will be decided.
The changes in the trade regulations are still relatively in flux and can be confusing. In the end, a lot of trade and movement of goods back and forth across the border will continue. We will continue to provide the best services in the area and ensure complete compliance with U.S customs laws and regulations. We are here to answer your questions. Call RM Customhouse Brokers, Inc. e today and get the clarity you need.