USMCA

SUMMARY

The United States Mexico Canada Agreement (USMCA) is a replacement for the North American Free Trade Agreement (NAFTA) between United States, Canada, and Mexico. Mexico and Canada are key trading partners for the United States and for our industry. We import billions of dollars with of auto parts from Mexico and export billions of auto parts into Canada. While repair shop owners will generally see a continuation of the status quo, USMCA has revised the rules of origin requirements for automobiles from 62.5% to 75% which means there will be more auto part production within the region and, perhaps, an increase in the cost of purchasing a new automobile. Time will tell, but that increase cost could translate into consumers keeping their existing vehicles for longer, which would benefit repair ships.

STATUS

USMCA was signed into law by President Trump on January 29, 2020. After all three member countries ratified the agreement, it entered into force on July 1, 2020. Unlike, NAFTA, USMCA has a sunset provision built into it where it will expire in 16 years. Additionally, every 6 years the three countries will review the agreement to see if it needs to be updated and if they want it to continue to be in effect.

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