USA, Canada, and Mexico Agree to A New Trade Deal

Last Updated:
February 6, 2019
Ole Jensen
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Recently, the United States, Canada and Mexico came to an agreement on a revised trade deal that could replace the North American Free Trade Agreement (NAFTA). The new deal, which is being referred to as the U.S.-Mexico-Canada Agreement (USMCA), was signed November 30, 2018.

The USMCA borrows heavily from the original text of NAFTA as well as the now-defunct Trans-Pacific Partnership. The USMCA includes, but is not limited to, the following:


Under the new USMCA rules, more of a vehicle’s parts must be made in North America if countries want to avoid tariffs. Specifically, 75 per cent of the parts must be made in Canada, Mexico or the U.S., which is about 12 per cent higher than it was in NAFTA.


The USMCA will now give the U.S. tariff-free access to 3.6 per cent of Canada’s dairy market. This is likely to bring millions of dollars worth of product into Canada—a move that industry leaders say could further erode Canada’s dairy protections.


Tariffs on steel and aluminum will stay at 25 per cent and 10 per cent respectively for both Canada and Mexico. This will greatly benefit the U.S., as they rely on steel and aluminum imports for their military needs.


The USMCA extends the period that a newly developed pharmaceutical drug is protected from generic competition to 10 years. Effectively, this means it will take longer for generic medications to reach the market, and Canadians may have to pay more for pharmaceuticals.

All three governments must still ratify the deal. While Canada and Mexico are expected to pass the USMCA, experts are concerned that it will get stuck in the U.S. Congress until 2019.