Agreement Reached on NAFTA Replacement

By SEMA Washington, D.C., Staff

Following months of negotiations, President Trump and U.S. House of Representatives Democrats reached agreement on the United States-Mexico-Canada Agreement (USMCA) which will replace the NAFTA accord. The three countries had already agreed to the USMCA’s major provisions, but the fine points of the trade deal were still subject to discussion. The legislatures of each country must approve the USMCA before it replaces the NAFTA accord. The U.S. House of Representatives is expected to vote on the trade pact in December, but the U.S. Senate may not schedule a vote until early 2020.

The USMCA will require that vehicles have 75% North American content, compared with 62.5% currently. At least 40%–45% of the vehicle content must be made by workers earning at least $16 an hour. The United States has agreed not to impose tariffs on imported automobiles and auto parts on Mexico and Canada if such tariffs are enacted. The United States has also excluded Mexico and Canada from the tariffs currently being imposed on steel and aluminum.

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