President Donald Trump struck a new trade deal Sunday night, revising the 1994 North American Free Trade Agreement with border nations Canada and Mexico.
Trump, while announcing the new deal on Monday in the White House Rose Garden, said with the adoption of the United States-Mexico-Canada Agreement, the U.S. will again be a "manufacturing powerhouse.”
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Trump promised to sign the agreement by November. He said he was "not at all confident," but felt Congress would likely ratify the agreement.
Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico. The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many......— Donald J. Trump (@realDonaldTrump) October 1, 2018
How does the new deal work? Here’s a look at the USMCA:
Car parts: More car and truck parts will be made in North America.
According to the new deal, for a car or truck to be sold in North American, 75 percent of its parts must be manufactured in Canada, Mexico or the United States. The current requirement is 62.5 percent.
Also, at least 30 percent of the work on building new cars and trucks must be completed by workers earning at least $16 an hour. By 2023, that number will go up to 40 percent.
Dairy: Canada will be giving a greater market share to U.S. dairy farmers. Milk protein concentrate, infant formula and other U.S. dairy products will have fewer Canadian tariffs.
Drugs: Ten years of data protection for biologic drugs and a large scope of products eligible for protection.
Tariffs: Canada and Mexico get a partial exemption from the steel and aluminum tariffs Trump levied earlier this year. The new deal would give a partial exemption from any potential future U.S. tariffs on cars.
Trade disputes: Canada wanted to preserve NAFTA’s Chapter 19, which is an independent panel set up to resolve special trade disputes. While the panel has changed a bit in the number of members – there are five members now – it stays mostly intact.
Sunset clause: The agreement will end in 16 years if it isn’t actively renewed.
Exchange rate curbs: There will be rules in USMCA to deter countries from artificially weakening their exchange rates in order to gain trade advantages with the three countries.
When will it go in effect?
Trump says he will sign the agreement in November, but most of the new deal’s provisions go into effect in 2020 since the legislatures in Mexico and Canada and the U.S. Congress must vote for the $1.2 trillion deal.
© 2018 Cox Media Group.