President Trump Just Abolished NAFTA. Here’s What’s in Store for the Three Countries

    Author Chelsea RohPosted on Categories PoliticsTags , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
    President Trump

    The North American Free Trade Agreement (NAFTA) has been completely abolished, and the new agreement was finalized in the nick of time on Sunday. “It’s not Nafta redone, it’s a brand-new deal,” President Trump said at the White House on Monday.

    If the new deal is adopted by the US, Canada, and Mexico, it will be called the United States-Mexico-Canada Agreement or (U.S.M.C.A). 

    U.S.M.C.A

    Major adjustments have been made in several key areas of the countries’ past trading relationships. One major focus of the new agreement is on automobile production. President Trump’s new plan is meant to incentivize the production of automobiles in North America, providing more jobs and utilizing countries that pay higher wages to their employees.

    Originally, NAFTA required automakers to make 62.5 percent of automobiles in North America to qualify for the zero tariffs. Now, over time this will be raised to 75 percent. What’s new to the agreement led by President Trump is the clause stating that a large percentage of the parts for any tariff-free vehicle must come from a higher wage factory.

    The new agreement states the factories must pay their employees a minimum wage of $16 an hour—which is currently triple the wage of a factory worker in Mexico right now. This will more than likely cause automakers to shift suppliers from Mexico to either Canada or the US.

    The new agreement led by President Trump will also allow American dairy farmers to sell their products to Canada.

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    Risks

    Despite the somewhat positive news for the US, automotive analysts think the new agreement could have damaging effects for American citizens. They feel the automobile companies will raise the prices of vehicles and could incentivize them to move production to low-cost countries like China.

    It remains unknown at this time how quickly we could see the effects of the new changes, but I suspect companies in both the dairy and automobile industry will move quickly to get ahead.

    Featured Image: wikimedia.org

    Author Chelsea Roh
    About the author: Chelsea Roh is a freelance writer. Her current focus is blockchain technology and cryptocurrency. One could even call her a blockchain "enthusiast." In addition to content writing, she is an experienced SEO and Social Media Strategist. Before moving to Canada, she spent 10+ years marketing and working hands-on in the medical practice industry within the U.S.A.