USMCA is the New NAFTA: What that Means and why it Matters

For 25 years, the North American Free Trade Agreement, or NAFTA, was a respected treaty regulating trade between Canada, the United States, and Mexico.

Now it’s been replaced by the United States-Mexico-Canada Agreement, or USMCA, a similar but decidedly different treaty.

Aside from the uninterestingly pragmatic name, experts and analysts are trying to figure out just what makes this new deal so different from the old one. There’s been some debate back and forth, with varying estimates and opposing opinions thrown in the mix, but here are three key points everyone is considering.

Auto Manufacturing

Heavier taxes will be placed on imported auto parts, incentivizing the use of domestically produced parts instead. What’s more, wages for the producers of certain parts will be set at a minimum of $16 per hour. This could be a boost for Mexican laborers who make much less than that, though it could just as easily lead to an increase of automated production lines.

Dairy Industry

American businesses will be granted greater access to the Canadian dairy market, and a recent Canadian policy restricting milk prices will be overturned. US farmers are excited for the broader sales base, though Canadian companies are not eager to have increased competition.

Digital Marketplace

Policies regarding digital transactions will be put in place, such as allowing criminal penalties for pirating movies and prohibiting duties on digitally distributed media, as well as reinforcing intellectual property protections like patents and copyrights. With Net Neutrality being so unstable recently, this could have major repercussions for online businesses.

The long-term effects are difficult to predict at the moment, not least of which because the agreement still needs to go through the US Congress before it can be implemented in the coming years.

There are those who praise USMCA as a refreshing and much-needed update, and there are those who decry it as more of the same with a shiny new name to boost the egos of those currently in power. As for those who are just trying to keep their international trade business in the black, rest assured Export Portal is here to help you navigate these rough waters. Polices may rise and fall like the tides, tariffs might come and go like storms, but Export Portal is proud to be a safe port for verified buyers and sellers to dock at and do business with.