All the Details of the New NAFTA Deal

NAFTA Deal

On Monday it was revealed that the United States and Canada had come to an agreement on North American Free Trade Association; NAFTA deal new terms. Combined with terms agreed with Mexico earlier in the year, this will change the face of trade on the continent.

Key Changes Under the New NAFTA Deal

Many of the changes to NAFTA deal will benefit the American economy. Some concessions are shared by both Canada and Mexico, whereas some have been presented as applying specifically to Canada. Both Canada and Mexico negotiated elements of NAFTA separately with the United States.

  • 45% of all autos exported to the U.S. from Canada and Mexico must be manufactured in factories that pay workers at least $16 USD per hour. This will, in theory, make Mexico less competitive with the U.S. and Canada. Low wages have traditionally made Mexican auto manufacturing more cost effective.
  • Provisions of the new deal also require that cars manufactured in Canada will use a minimum of 75% U.S. parts. This will help to protect the auto parts industry in the U.S., even if cars are manufactured beyond the border.
  • Canada has agreed to open its dairy market to American producers, which should generate massive income in the industry.
  • Canada will remove duties from American goods purchased through ecommerce, up to a value of $150. This will benefit companies like Amazon, which didn’t exist when the first NAFTA agreement was signed in the mid-90s.
  • President Trump’s sweeping international steel tariffs introduced earlier this year will remain in place under the new NAFTA agreement. Canada and Mexico will need to negotiate with the U.S. in the future to have metal tariffs removed.
  • Canada has agreed to extend patent protection on prescription medications. Patents will now be valid for ten years, rather than eight. This will protect pharma companies that have made significant investments in new medications.

NAFTA Deal Will Require Renewal Every 16 Years

Many of the provisions of the original NAFTA agreement have remained unchanged for 24 years. President Trump believes (and evidence supports this) that this has led to a huge decline in American manufacturing and industry.

Canada and Mexico will now be bound to 16-year renegotiation periods, with the U.S. threatening to lapse its participation if this does not happen.

President Trump’s push to create fairer trade has been successful. Agreements are expected to pass through lawmakers in all three countries within the next 90 days.

 

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The reports, research and newsletter are based on current and historical market data, as well as publicly available financial data.They are intended to be a starting point for investors. They do not provide every material fact about a company or industry, nor are they recommendations to buy or sell. The writers and the company make no warranties or representations as to the accuracy of these reports.   You should NOT rely solely upon the information or opinions read in the content. Rather, you should use the content as a starting point for doing independent research on the independent analysis and trading methods in the content. The content is impersonal and does not provide individualized advice or recommendations for any specific reader or individual portfolio. By accessing this website you have agreed to our disclaimers and privacy policy.

 

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