What do American dairy farmers, Mexican automobile manufacturers, and Canadian pharmacologists all have in common? Though the question itself sounds like the beginning of a bad joke, the answer is an exciting new economic reality, outlined in the United States-Mexico-Canada Agreement, or USMCA. The USMCA was announced on September 1st, just before the midnight deadline. The agreement will revise the North American Free Trade Agreement (NAFTA), which has governed trade laws between the U.S., Mexico, and Canada since its ratification in 1994. At a high level, the new agreement will open trade and create higher production standards between the nations, giving business leaders, workers, and citizens in all three nations something to cheer about.  

President Trump first called for changes to NAFTA during his 2016 campaign, when he raged against America’s trade deficit and its excessive contribution to agreements like the Trans-Pacific-Partnership (TPP) and NATO. As with many of Trump’s campaign promises, good and bad, Trump adhered to his words by pursuing this new trade agreement with Mexico and Canada.

But what does the USMCA really change? Though the agreement is quite intricate, the changes can be broken down into three main categories: diary, labor rights, and modernization.

American dairy farmers and consumers will be delighted by the new clauses in the agreement which make significant progress against the extremely strict, protectionist Canadian dairy laws. Allowing more US milk products to be sold in Canada, the change will open new markets for American farmers and should lower prices for Canadian consumers as well.

In terms of labor laws, workers, especially in the automobile industry, should see many positive changes in the coming years. Under the USMCA, 40 to 45 percent of automobile parts will be made by workers who earn at least $16 an hour. This provision specifically targets Mexico and is accompanied by laws that would grant greater unionization powers and job security for both workers and migrant laborers. This new minimum wage requirement should also help prevent the outsourcing of automobile manufacturing to Mexico, keeping jobs in the United States.

The USMCA will also require that cars or trucks have 75 percent of their components manufactured in Mexico, the US, or Canada to qualify for zero tariffs, meaning exporting cars to North America will become more expensive. This change will encourage domestic job creation and incentivize countries to keep manufacturing at home.

Finally, having been last updated over twenty years ago, the USMCA updated copyright policies and drug patent laws, as well as declaring no duties on electronically purchased items, liability laws, and much more to address internet trade and the modernizing pharmaceutical industry. Despite being a Trump initiative, Democratic pushback has been limited, and those who oppose the bill generally argue only that the agreement did not go far enough without specifying what else they had hoped for. This argument holds little merit for, though the USMCA is not perfect, it is a significant improvement over NAFTA, which would remain in place if the USMCA was not ratified. USMCA even sets up a brand new system through which the trade agreement can be frequently revised and updated if issues arise. Overall, all three world leaders enthusiastically stand behind the agreement, with the Mexican President Enrique Peña Nieto declaring it a “win-win-win.” So 2020, get ready for an exciting new economic reality!