What is USMCA and how are Chinese goods directly related?

Following up on the trade talks between USA, Canada and Mexico to renegotiate what was NAFTA,



Following up on the trade talks between USA, Canada and Mexico to renegotiate what was NAFTA, President Donald Trump recently reported that Canada will be joining the renewed agreement previously reached with Mexico (now called USMCA). This was completed after several trade talks and rounds of negotiation in regards to key chapters of the so-called deal about main issues such as intellectual property, digital commerce, agriculture, and automobiles, among other topics.


Tensions begin to calm.. with a deal

Before this, there was some tension and discussion towards what could happen with Canada if they could not meet American demands or fairly negotiate auto-tariffs in particular according to the New York Times. Although the Canadian nation did not refuse to continue bargaining, Prime Minister Justin Trudeau managed to firmly state they could not guarantee they have ceded to all US requests.

Now, according to Morning Star the new deal will mainly impact the automobiles industry. “A new rule stipulates that at least 40-45% of a car must be made by workers earning at least $16 an hour. That’s more than five times the amount Mexican auto sector workers currently earn.” Also, the United States will have access to the Canadian dairy market, which they have struggled for many years.

The shift from NAFTA to USMCA will affect significantly the Auto Industry. Now is the time for auto manufacturers and auto part makers to strategize how their organisations can optimise their position within a newly framed North American auto industry.

In addition, all parties involved will have to sign the agreement before the year ends and have expressed they feel comfortable and benefited, especially the US as “both Canada and Mexico are its largest single country export markets”, as stated by Edward Park, investment director at Brooks Macdonald.


China’s influence

But where do Chinese goods stand in all of this? As the known commercial war between USA and China around the tariffs that Trump has placed over Chinese merchandise has certainly cause some uncertainty as they are both the most powerful countries in the world, some specialists and economists have pointed we will be able to see further moves until President Xi Jinping visits Trump in upcoming weeks. Others do mention as well that if the American President “gains traction in signing US friendly trade deals it is likely to solidify the harder line that the administration is adopting with China.”

President Trump and Chinese President Xi Jinping are looking more likely to meet late next month at the Group of 20 summit in Buenos Aires to discuss their escalating trade dispute.

Moreover now that Mexican President Peña Nieto is finishing his term and AMLO’s new administration is about to take over the Mexican nation, it is crucial that all advances over the past months finalize for the Americans. Some experts also have mentioned this new government figure of what AMLO represents and is looking for China to increase business and have more influence over Latin America. This is because AMLO’s interests and policies could be alike to some of China’s and may put at risk Trump’s plans.

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