Taxes, Tariffs & Trade
The United States, Mexico and Canada announced the final step in the renegotiation of the North American Free Trade Agreement (NAFTA) November 30, when President Trump, Canadian Prime Minister Trudeau and Mexican President Pena Nieto signed the United States-Mexico-Canada Agreement (USMCA) in Buenos Aires. Details are outlined in a Presidential Fact Sheet.
This investigation is focused on small- and medium-sized businesses and supports the current agenda of The United States-United Kingdom Trade and Investment Working Group, which is assessing ways to strengthen trade and investment ties and provide commercial continuity for U.S. and U.K. businesses as the U.K. prepares to leave the European Union.
In October, more than 150 members of Congress wrote Lighthizer urging him to establish a process that allows U.S. companies to request an exclusion from List 3, consistent from those created for Lists 1 and 2. The exclusion process for List 1 ended Oct. 9. Exclusion requests for items on List 2 are due by Dec. 18.
President-elect Obrador, who takes office December 1, has suggested two names, and requested alternatives from the public:
- TEUMECA – translated to treaty between the United States, Mexico and Canada; and,
- T-MEC – translated to treaty between Mexico, United States and Canada.
NAFEM members interested in sharing feedback on how the United States-Mexico-Canada Agreement (USMCA) will impact their businesses are invited to provide information no later than Dec. 20.
If approved, most provisions of USMCA will not go into effect until 2020. According to its terms, the agreement must be reviewed after six years and can then be implemented for another 10 years. The agreement sunsets after 16 years. However, if any of the countries sign a trade deal with a “non-market” economy (i.e., China), they may be removed from USMCA. Although it’s too soon to determine specific implications for NAFEM members, the National Association of Manufacturers (NAM) sees the agreement as positive.
The U.S. Department of Commerce (DOC) Bureau of Industry and Security (BIS), which is overseeing the exclusion request process for Section 232 tariffs on imported steel and aluminum, has already received more than 40,000 exclusion requests. To help mitigate the backlog, BIS recently updated the exclusion request process.
The Trump administration has imposed tariffs on steel and aluminum and hundreds of products imported from China in what seems to be an escalating trade war. In response, many nations – including some of our historic allies – are retaliating with their own tariffs, including China, Canada, Mexico and the European Union.
Following are some additional resources that may be of interest to members considering how to best manage their supply chain. • Building the supply chain of the future, McKinsey & Company management consultants • Five essential stages in developing a successful supply chain, Trade Ready blog • Using supply chains to grow your business, Harvard Business Review