United States-Mexico-Canada Agreement (USMCA) Finalized

On August 27, the existing North American Free Trade Agreement (NAFTA) was replaced with a new tentative accord between the United States and Mexico. The original NAFTA had been instituted to remove trade barriers and most tariffs between the United States, Mexico and Canada, but it was not until September 30 that all three nations came to an agreement that pulled Canada into the mix.

Now known as the United States-Mexico-Canada Agreement (USMCA), the pact looks to yield positive results in manufacturing sectors within each of the respective countries. Starting in 2020, it will require that 75% of a car’s parts will have to come from one of these three countries to qualify for duty-free treatment, an increase from the previous 62.5% requirement. Also starting in 2020, it will be required that at least 30% of vehicle manufacturing work be completed by workers earning at least $16 per hour. That figure will gradually move to 40%, for cars, by 2023. The consensus is that these provisions will help bring manufacturing jobs back to the U.S.

Outside of manufacturing, the agreement also brings about changes for the U.S. dairy sector. Historically, the Canadian government has sought to restrict the amount of dairy produced within the country. With the USMCA, U.S. dairy farmers will be able to increase the amount of product sent to north of the border.

The three countries are expected to sign the agreement by December 1. USMCA will last for 16 years and will be subject to revision every six.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2024 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Auto Industry Value and Economic Indicators
Survey on Career Advancement and Women in the Manufacturing Sector
Technology Enhancements Continue to Infuse the Manufacturing World
Automobile, Tax BY Steven Barber
Dealers Get an Extension for Time-of-Sale Reports for EVs
Automobile, Tax BY Steven Barber
Shocking! A Dealer Reporting EV Sales to the IRS is Confusing!
Automobile, Tax BY Brett Cubellis
Explaining the Transfer/Advance Payment of Clean Energy Credits and Energy Credits Online Registration
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×