Released December 03, 2018 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The signing of the U.S.-Mexico-Canada Agreement (USMCA) on Friday by the leaders of the three nations has drawn a mixed reaction from industry groups. The new trade pact drew praise from most industry organizations, but continued U.S. tariffs on imported steel and aluminum from Mexico and Canada remains a point of concern for some industries.
President Donald Trump said the trade pact will "support high-paying manufacturing jobs and promote greater access for American exports across the range of sectors, including our farming, manufacturing and service industries. As part of our agreement, the United States will be able to lock in our market access to Canada and Mexico, and greatly expand our agricultural exports - something we've been wanting to do for many years."
The agreement would replace the North American Free Trade Agreement (NAFTA). The pact still requires the approval of Congress.
Trade groups such as the American Iron and Steel Institute (AISI) and the National Association of Manufacturers (NAM) praised the agreement.
The new agreement builds on NAFTA "by establishing new rules of origin that will further incentivize the use of North American steel in the manufacturing of automobiles and other steel-intensive goods in North America," AISI Chief Executive Officer Thomas Gibson said in a press statement. Industrial Info is tracking $23 billion in active steel mill projects in the U.S.
Click on the image at right for a graph showing U.S. steel mill project activity.
NAM Chief Executive Officer Jay Timmons urged swift legislative action on the trade pact. "Manufacturers need certainty now, not later. With 2 million American jobs dependent on exports to Canada and Mexico, Congress should move expeditiously to review the USMCA before the end of this year," he said in a press statement.
Among other things, according to the Trump administration, the USMCA includes updated rules of origin that require 75% of auto content to be produced in North America; would help incentivize billions of dollars in additional vehicle and auto parts production in the U.S.; and includes a requirement that 40-45% of a vehicle consist of content manufactured by North American workers making at least $16 per hour.
The Alliance of Automobile Manufacturers, which represents companies that are responsible for 70% of all car and light truck sales in the U.S., said it was pleased with the signing of the agreement, but added it remained concerned over existing steel and aluminum tariffs imposed by the U.S., as well as the threat of new tariffs on imported autos and auto parts, which could "eliminate any benefits derived from the new USMCA agreement and damage the competitiveness of the U.S.-based auto industry."
For related information, see November 27, 2018, article - GM Cuts Workforce, Shuts Plants as it Hits Pedal on Heavy-Duty and Self-Driving Cars.
The Aluminum Association, which represents companies such as Alcoa Corporation (NYSE:AA) (Pittsburgh, Pennsylvania), Arconic Incorporated (NYSE:ARNC) (New York, New York), Kaiser Aluminum (NASDAQ:KALU) (Lake Forest, California) and Constellium (NYSE:CSTM) (Amsterdam, Netherlands), also has voiced concerns of the continued tariffs on aluminum products from Canada and Mexico.
"The [USMCA] simply cannot work as intended for the aluminum industry and our customers with tariffs -- or quotas to limit access to supply -- in place," Aluminum Association Chief Executive Officer Heidi Brock told the U.S. International Trade Commission (ITC) on November 16. "Full, quota-free exemptions for Canada and Mexico from aluminum tariffs as part of this agreement will benefit the U.S. aluminum industry and the hundreds of thousands of American workers who depend on its success."
In 2017, nearly 50% of all aluminum flowing into or out of the U.S. either originated from, or was destined for a NAFTA trading partner, according to the Aluminum Association.
"In particular, Canada is a major source of primary aluminum for the United States. This reliable supply of aluminum has helped drive investments in our mid-and-downstream sectors -- which make up 97% of all U.S. aluminum industry jobs. Last year, the U.S. consumed nearly 6 million metric tons of primary aluminum, yet the U.S. only has the capacity to produce about 2 million metric [tons]," Brock said. She added the U.S. should focus its attention on illegally subsidized Chinese overcapacity.
The Trump administration initially excluded Canada and Mexico from the 10% aluminum import tariff, but those exclusions expired in June. The tariffs were imposed earlier this year after an investigation determined that high imports posed a national security threat. For more information, see August 17, 2018, article - U.S. Aluminum Tariff Yields Mixed Results.
The 25% steel import tariffs appears to have had a more straightforward beneficial impact on domestic producers. U.S. steel imports for 2018 through October totaled 29.4 million tons, down 10.6% from the same period in 2017. For related information, see September 28, 2018, article - U.S. Steel Industry is All Smiles with Strong Profits, $3.7 Billion in Fourth-Quarter Kickoffs.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
President Donald Trump said the trade pact will "support high-paying manufacturing jobs and promote greater access for American exports across the range of sectors, including our farming, manufacturing and service industries. As part of our agreement, the United States will be able to lock in our market access to Canada and Mexico, and greatly expand our agricultural exports - something we've been wanting to do for many years."
The agreement would replace the North American Free Trade Agreement (NAFTA). The pact still requires the approval of Congress.
Trade groups such as the American Iron and Steel Institute (AISI) and the National Association of Manufacturers (NAM) praised the agreement.
The new agreement builds on NAFTA "by establishing new rules of origin that will further incentivize the use of North American steel in the manufacturing of automobiles and other steel-intensive goods in North America," AISI Chief Executive Officer Thomas Gibson said in a press statement. Industrial Info is tracking $23 billion in active steel mill projects in the U.S.
NAM Chief Executive Officer Jay Timmons urged swift legislative action on the trade pact. "Manufacturers need certainty now, not later. With 2 million American jobs dependent on exports to Canada and Mexico, Congress should move expeditiously to review the USMCA before the end of this year," he said in a press statement.
Among other things, according to the Trump administration, the USMCA includes updated rules of origin that require 75% of auto content to be produced in North America; would help incentivize billions of dollars in additional vehicle and auto parts production in the U.S.; and includes a requirement that 40-45% of a vehicle consist of content manufactured by North American workers making at least $16 per hour.
The Alliance of Automobile Manufacturers, which represents companies that are responsible for 70% of all car and light truck sales in the U.S., said it was pleased with the signing of the agreement, but added it remained concerned over existing steel and aluminum tariffs imposed by the U.S., as well as the threat of new tariffs on imported autos and auto parts, which could "eliminate any benefits derived from the new USMCA agreement and damage the competitiveness of the U.S.-based auto industry."
For related information, see November 27, 2018, article - GM Cuts Workforce, Shuts Plants as it Hits Pedal on Heavy-Duty and Self-Driving Cars.
The Aluminum Association, which represents companies such as Alcoa Corporation (NYSE:AA) (Pittsburgh, Pennsylvania), Arconic Incorporated (NYSE:ARNC) (New York, New York), Kaiser Aluminum (NASDAQ:KALU) (Lake Forest, California) and Constellium (NYSE:CSTM) (Amsterdam, Netherlands), also has voiced concerns of the continued tariffs on aluminum products from Canada and Mexico.
"The [USMCA] simply cannot work as intended for the aluminum industry and our customers with tariffs -- or quotas to limit access to supply -- in place," Aluminum Association Chief Executive Officer Heidi Brock told the U.S. International Trade Commission (ITC) on November 16. "Full, quota-free exemptions for Canada and Mexico from aluminum tariffs as part of this agreement will benefit the U.S. aluminum industry and the hundreds of thousands of American workers who depend on its success."
In 2017, nearly 50% of all aluminum flowing into or out of the U.S. either originated from, or was destined for a NAFTA trading partner, according to the Aluminum Association.
"In particular, Canada is a major source of primary aluminum for the United States. This reliable supply of aluminum has helped drive investments in our mid-and-downstream sectors -- which make up 97% of all U.S. aluminum industry jobs. Last year, the U.S. consumed nearly 6 million metric tons of primary aluminum, yet the U.S. only has the capacity to produce about 2 million metric [tons]," Brock said. She added the U.S. should focus its attention on illegally subsidized Chinese overcapacity.
The Trump administration initially excluded Canada and Mexico from the 10% aluminum import tariff, but those exclusions expired in June. The tariffs were imposed earlier this year after an investigation determined that high imports posed a national security threat. For more information, see August 17, 2018, article - U.S. Aluminum Tariff Yields Mixed Results.
The 25% steel import tariffs appears to have had a more straightforward beneficial impact on domestic producers. U.S. steel imports for 2018 through October totaled 29.4 million tons, down 10.6% from the same period in 2017. For related information, see September 28, 2018, article - U.S. Steel Industry is All Smiles with Strong Profits, $3.7 Billion in Fourth-Quarter Kickoffs.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
