USMAC Exempts Certain Items Coming out of Mexico and Canada
It must be fun to play the crowd, making them think what a tough guy the president is. Did he (being Trump) not know there was a trade agreement with Mexico? Something called the USMCA Agreement? Of course, he did. Of course, much of the US population do not realize this exists and has existed for a while. PS. Mexico already had its military at the border. Trump is a great story teller.
He is playing the American public showing he is battling cheap goods manufactured outside of the US. By going back and forth with a discussion on trade with Mexico, he is hoping citizens will be confused and agree with his stance on imports from Mexico. That he is fixing the issue.
Two things come to mind. Manufacturing is a lesser percentage of the US economy than the Service industry in the US. New Deal democrat on Angry Bear in his daily commentaries has been on top of this change. Manufacturing is 25% of the economy as compared to the Service industry.
Indeed, the shift to Mexico was made years ago. Much of the automotive components used in US autos is assembled domestically are either made or assembled in Mexico. But why is this?
It is less costly in Mexico. The one thing which comes to mind is healthcare which is Overhead and is readily available in Mexico outside of companies. That is one factor. Well, want about wages? Definitely, Labor is cheaper in Mexico. Keep in mind the percentage of Labor in a part is a small portion. Automation, efficiency, improved throughput took care of the issue of Labor costs. Quick example being pennies on the dollar. You save a small percentage in comparison to the US.
U.S. – Mexico – Canada Agreement (USMCA), U.S. Customs and Border Protection
“USMCA is primarily a modernization of NAFTA, namely concerning intellectual property and digital trade, and borrows language from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Canada and Mexico are signatories. Key changes from its predecessor include increased environmental and working regulations; greater incentives for automobile production in the U.S. (with quotas for Canadian and Mexican automotive production); more access to Canada’s dairy market; and an increased duty-free limit for Canadians who buy U.S. goods online. The USMCA contains a provision for review and adjustment in 2026.“
President Donald Trump’s 25% tariffs on imports from Mexico and Canada won’t apply to goods that comply with an existing trade agreement, giving companies a temporary reprieve.
“I agree that Mexico will not pay Tariffs on anything that falls under the USMCA Agreement,” Trump said on social media, referring to the trade deal he negotiated during his first term in office. “I did this as an accommodation, and out of respect for, President [Claudia] Sheinbaum.”
Despite Trump’s phrasing, Mexico would not actually pay for his tariffs. Border agents collect the federal government’s cut from the company that’s paying to import a foreign product. In this case, that means U.S. companies pay more to import the same goods from Mexico.
The reprieve comes just a few days after the president’s tariffs went into effect following an earlier one-month delay negotiated by Mexico, which had agreed to send more military personnel to its border with the U.S. Sheinbaum was set to detail Mexico’s retaliation against Trump’s tariffs on Sunday.
“Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl,” Trump wrote.
Despite Trump’s phrasing, Mexico would not actually pay for his tariffs. Border agents collect the federal government’s cut from the company that’s paying to import a foreign product. In this case, that means U.S. companies pay more to import the same goods from Mexico.
Fo USMAC Agreement Items:
The U.S.-Mexico-Canada Agreement (USMCA), which Trump heralded during his first term as a negotiating victory, allows goods to move among the three countries tariff-free if they follow certain rules. The rules require that a product be made entirely in North America or be substantially transformed in North America if it is made of components from other countries. For products like autos, 75% of the content must be from North America.
The tariffs for non-USMCA-compliant goods could address concerns past and current U.S. officials have raised about Chinese goods’ being shipped into Mexico and then sent to the United States tariff-free, without having met the USMCA requirement of having been substantially transformed in North America.
U.S. – Mexico – Canada Agreement (USMCA), U.S. Customs and Border Protection
Hmmmmm
United States–Mexico–Canada Agreement – Wikipedia