July 1, 2020 marks the beginning of a new era of free trade in North America under the United States-Canada-Mexico Agreement ("USMCA").

Negotiating a “new NAFTA” that resulted in the USMCA was a cornerstone of President Trump’s election. The USMCA maintains a lot of the old agreement but does bring some changes, especially for the automotive industry.

Some of the major changes that came out of long negotiations included new labor and pay standards. Modified rules of origin and domestic content standards will impact the automotive industry. Essentially, the new rules of origin mean that materials will have to be made within North America in order for those cars to get that free trade benefit.

Unlike NAFTA, the USMCA has a sunset provision meaning the terms of the agreement expire, or “sunset” after 16 years of implementation unless renewed or modified by the parties. The deal also includes new rules to resolve trade disputes.

If you have questions on how these changes may affect your business, please reach out to Ed Patton.