The U.S. - Mexico Trade Agreement Impact on U.S. Manufacturing

The North American Free Trade Agreement (NAFTA) has been in the news recently, which is not surprising since President Trump signed an executive order to renegotiate the existing agreement back in January 2017. The original NAFTA agreement instituted a trade agreement between the United States, Canada and Mexico that removed trade barriers, eliminated most tariffs, and increased investment opportunities between the aforementioned nations.

On August 27, 2018, the existing NAFTA agreement was replaced with a tentative agreement between the United States and Mexico. This agreement, the U.S. – Mexico Trade Agreement, includes updates to provisions surrounding the digital economy, automobiles, agriculture and labor unions. Currently, Canada is on the outside looking in, and it remains to be seen whether the U.S. – Mexico Trade Agreement will become a trilateral pact between the three nations, or if talks of an agreement will go a different route.

As the U.S. – Mexico Trade Agreement currently stands, there appears to be benefits for the U.S. manufacturing industry. The new agreement encourages U.S. manufacturing and economic growth by requiring that 75% of auto content be made in these two countries and that 40% to 45% be made by workers earning at least $16 per hour. With the stipulation of higher wages, some of the work could theoretically shift from Mexico to the U.S.  It remains to be seen what the overall impact of the new agreement will be and how talks with Canada will go, but early indications include potential increases in manufacturing in the U.S., particularly in the automotive industry.

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 contactSD@schneiderdowns.com.

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.

© 2019 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

Tax Credits for Plug-In Electric Drive Vehicles
Results and Implications of the Institute for Supply Management’s Report on Business – 1st Half of 2019
The Landscape of Manufacturing: A Look Into the Past and the Future
Update: Tax Change to Receiving Advance Payments
When to Buy New Electronics? Now!
Skilled Labor Shortage in the Manufacturing Industry

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

Map of Pittsburgh Office
Pittsburgh

One PPG Place, Suite 1700
Pittsburgh, PA 15222

contactsd@schneiderdowns.com
p:412.261.3644     f:412.261.4876

Map of Columbus Office
Columbus

65 East State Street, Suite 2000
Columbus, OH 43215

contactsd@schneiderdowns.com
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102