The Trump administration`s undisguised denigration of the North American Free Trade Agreement (NAFTA) resulted in a substitution deal announced on Oct. 1 with the governments of Canada and Mexico. Under the USMCA, costs are influenced in different ways. On the one hand, there is a higher bar for goods that arrive in the United States duty-free, depending on where they were actually manufactured. And while the deal is supposed to focus on the U.S., Mexico and Canada, it will also have a big influence on China, which uses Mexico as a transshipment point for parts that eventually land in the U.S. It is difficult to predict the exact impact of the USMCA on the automotive industry. Based on what we know, we can probably expect this: The USMCA went into effect on July 1, 2020, ending twenty-six years of NAFTA rule. The new agreement focused on updating the rules applicable to the automotive sector. While much of NAFTA is similar to NAFTA, it is essential for all parties operating in the automotive delivery chain to understand the key differences and understand the impact these changes may have on current operations.
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