Though his methods may not be ideal, there is no denying that US President Donald Trump has altered the trade environment not only in North America but around the world. USMCA is now a reality after the renegotiation of NAFTA and now there is a possibility for greater economic cooperation between the US and China. Time will tell if negotiations will be fruitful.
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Road to Ratification
Now that USMCA is signed, the agreement will go to ratification in Mexico, Canada and the US. President Trump has threatened to leave NAFTA to pressure the US Congress to ratifying the agreement without further changes.
President Andrés Manuel López Obrador’s administration has also asked the US to ratify the agreement without changes to what was already negotiated before signing the treaty. “We know there is tension between Democrats and Republicans but it will be the Executive’s job to solve this,” said Luz María de la Mora, Undersecretary of Foreign Trade at the Ministry of Economy.
China and the US agreed to a truce in their trade war. The US put on hold the increment in tariffs to US imports to 25 percent scheduled for January 1, 2019 and the mandataries from both countries agreed to open dialogue for 90 days starting December 1, 2018.
China agreed to open its market further to US companies and vowed to reduced tariffs on US-made vehicles, which are currently at 40 percent. “We hope tariffs are removed altogether,” said Larry Kudlow, Economic Advisor to the White House.
Mary Barra, Executive President of GM, was criticized by Michigan legislators for the company’s decision to halt production at four plants in the US and lay off 15,000 workers, while the company announces production of the new Blazer SUV in Mexico.
President Trump threatened to remove all incentives the government offered to GM. Faced with legal repercussions should one company be singled out, the government is now analyzing the possibility of removing subsidies on electric vehicles altogether.
Volkswagen and Ford are in talks to potentially establish an alliance that would help the former produce more vehicles in the US using Ford’s unoccupied installations, said Herbert Diess, CEO of Volkswagen.