The new U.S.-Canada-Mexico Agreement (USCMA), which is soon to replace NAFTA as the prevailing North American trade agreement, should turn out to be mostly positive for the American trucking industry.
The new deal, which was announced on October 1 by U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau, includes several provisions that will improve trucking business for U.S. haulers, though one clause in the agreement could reduce the positive effect.
Cross-border trucking is one of the biggest issues addressed by the USMCA, which gives the United States more control over the existing cross-border program. Once the accord is ratified by the three nations’ legislatures – which is expected in early 2019 – the U.S. government can put a cap on the number of Mexican-owned carriers that can receive U.S. operating authority and review the status of those that currently have that authority, according to an article in Overdrive Online.
In fact, under the USMCA, the United States can place a moratorium on allowing any more Mexican truckers access to the U.S. and alter the number of cross-border program participants if, according to the treaty’s language, it finds that “limitations are required to address material harm or the threat of material harm to U.S. suppliers, operators or drivers.”
Not to mention that these Mexican carriers – 41 of which currently have U.S. operating authority – can provide only cross-border hauls to and from the United States. They cannot accept loads between U.S. points.
While the U.S. and Mexico reached agreement a month ago, Canada remained a holdout as a potential North American trade war loomed. While USMCA does not resolve most current disputes over steel and aluminum tariffs among the three nations, as well as the retaliatory tariffs that have resulted, it does remove the threat of motor-vehicle tariffs.
In a move that could both help and hurt American trucking, USMCA mandates that North American-made vehicles must consist of 75% North American-made parts, up from 62.5% under NAFTA. The U.S. Trade Representative’s office said that this requirement will bring back some manufacturing jobs and production that had been moved overseas. It will also increase the number of parts shipped by truck from parts manufacturers to vehicle manufacturers.
But those gains will be counteracted by the loss in trucking business from America’s international ports, which has boomed in recent years as more and more manufacturers have outsourced their work overseas. The increase in auto parts made in North America will reduce the number of containers transferred from ship to truck, especially on the West Coast and in Texas.
Of course, some analysts say the new parts requirements could cause even more manufacturing to be shipped overseas, penalties and tariffs notwithstanding – that they would be less expensive than the cost of making the parts here. Then again, Trump could increase those tariffs 10-fold.
However, the most positive USMCA news for truckers from the Great White North is probably the partial opening of Canada’s dairy market to the United States. Canada will allow more U.S. dairy, poultry and eggs to come in, and the U.S. will accept more Canadian dairy, peanuts, peanut products, and some sugar into its markets. The Dairy Farmers of Canada don’t like it, but because no one is clamoring for a milk pipeline and because chickens can’t fly, truckers should be ecstatic since these products will have to get from country to country somehow.
Overall, USMCA could prove to be a positive for American trucking companies and drivers, though there will likely be some hurdles along the way.
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