Does USMCA do anything to protect US manufacturing jobs?

DC – Wednesday, President Donald Trump signed into law a bi-partisan plan to update the North American Free Trade Act arranged by President Bill Clinton.

Does the USMCA help protect manufacturing jobs, and if so, how?

To qualify for USMCA’s duty-free benefits, 75% of a car and its parts must come from within North America, up from 62.5% under NAFTA. That means more content would have to be homegrown in higher-wage North America, not imported more cheaply from China and elsewhere.

At least 40% of vehicles would also have to originate in places where workers earn at least $16 an hour. That would benefit the United States or Canada — not Mexico, where auto assembly workers are paid a fraction of that amount. For car buyers, that wage requirement is likely to increase the cost of vehicles built in North America.

Under USMCA, Mexico is required to formally authorize workers to form independent unions. Mexican unions had traditionally been co-opted by employers and the government and had done little for workers. Laborers have been fired, for example, for trying to bargain on their own for better pay and working conditions. That’s one reason why Mexican wages remained so low — and attractive to U.S. manufacturers that wanted to cut costs.

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