USMCA’s 2nd anniversary: an update on NAFTA

According to a Wilson Center study, the first two years of the United States-Mexico-Canada Agreement (USMCA) look 'promising', calling it an improvement over its predecessor, the North American Free Trade Agreement (NAFTA).

Two years after its implementation, the study's co-author, Earl Anthony Wayne, pointed out that the trade agreement has been very significant for the United States, bringing trade back to its pre-pandemic levels, with an average increase of 6% across the region between 2019 and 2021; generating $2 million dollars per minute every day.

He noted that the United States exports more to Mexico and Canada than to Europe. In fact, sales to the USMCA partners are more than double shipments to China.

According to the Census Bureau, from January to May 2022, exports to Mexico and Canada totaled $276 billion dollars, while those to China totaled only $60 billion dollars.

In 2021, these figures reached $584.1 billion in the first case and $151.1 billion in the second case.

The agreement will be formally reviewed in 2025-2026.

The automotive industry, the most benefited

The U.S. Trade Representative, Katherine Tai, explained that the North American region increased the attraction of automotive investments during the first two years of the USMCA thanks to its new rules of origin.

USMCA will increase the Regional Content Value of a car from 62.5% to 75% in a gradual manner in order to receive tariff benefits. It also demands that 40% of the vehicle's value must be produced using wages of at least $16 per hour.

Sources: Wilson Center, Census Bureau, and El Economista.