Alabama automakers like Mercedes-Benz U.S. International, pictured above, will experience significant changes as a result of the United States-Mexico-Canada Agreement (USMCA).
President Donald Trump has signed into law the United States-Mexico-Canada Agreement (USMCA), which will bring significant changes in automotive production, an industry important to Birmingham and Alabama.
USMCA is a free trade agreement between the aforementioned North American countries that is a revision of NAFTA, the North American Free Trade Agreement. Much of USMCA echoes the verbiage of NAFTA but does offer significant changes in areas such as automotive production. Where NAFTA required automakers to produce 62.5 percent of a vehicle’s content in North America to qualify for zero tariffs, USMCA will raise that percentage to 75 percent over time – a benefit for automakers and suppliers.
It’s an issue that hits close to home, as Alabama has emerged as an advanced manufacturing hub for the automotive industry. Alabama automakers produce nearly 1 million cars and light trucks annually and ranks in the top five states for car and light truck production, according to data from the Economic Development Partnership of Alabama (EDPA).
The Birmingham region is home to a manufacturing plant for Autocar, with plants for Honda, Hyundai and Mercedes-Benz U.S. International and the forthcoming Toyota-Mazda facility nearby. Alabama is home to 150 automotive suppliers.
The Birmingham Business Alliance’s federal legislative agenda listed USMCA as an economic growth priority item, supporting a balanced trade agreement with Canada and Mexico that creates American jobs, boosts economic growth and strengthens local economies. The agenda cited the automotive industry as well as manufacturing, machinery, and primary metals and chemicals as sectors that have been positively impacted through trade.
“Trade is an economic engine for our state and the Birmingham region,” said BBA Manager of Public Policy Elizabeth Paul. “The BBA advocates for policies that support quality job growth and economic resilience, and the USMCA will preserve our trade ties to Canadian and Mexican markets. Exports support over 25,000 jobs in the Birmingham region alone. We look forward to increased economic prosperity under the USMCA, specifically for our small and medium-sized businesses.”
Canada has yet to ratify the USMCA but is expected to do so within the coming months.
Click here to see the BBA’s state and federal legislative agendas.