In the wake of this weekend’s signing of the United States-Mexico-Canada Agreement (USMCA), a move that saved the North American Free Trade Agreement (NAFTA) and the $1.2 trillion open-trade zone it created between the countries in 1994, the Motor and Equipment Manufacturers Association (MEMA) today issued a statement supporting the pact.
“We are pleased that the United States, Mexico and Canada have been able to reach an agreement. It is critical that all three parties be a part of the USMCA agreement,” according to the announcement. MEMA, parent company of the Heavy Duty Manufacturers Association (HDMA), says NAFTA in its original incarnation “was due for modernization while ensuring the open and free market our members rely upon to remain globally competitive.”
MEMA stressed the “potential strength and longevity” of the USMCA are “in the details,” and the association will be reviewing the deal “to gauge how its provisions and rules will affect motor vehicle parts manufacturing, the largest sector of manufacturing jobs in the United States.”
The trade agreement upholds President Donald Trump’s ability to impose 25 percent global tariffs on vehicles. However, should he impose Section 232 autos tariffs on national security grounds, Mexico and Canada would each get an annual tariff-free passenger vehicle quota of 2.6 million vehicles exported to the U.S., and pickup trucks built in both countries would be exempted entirely, according to Reuters. The report also states that Mexico will get an annual auto parts quota of $108 billion, while Canada will get a parts quota of $32.4 billion in the event of U.S. auto tariffs.
