USMCA should help Michigan's economy

Published: Jan. 16, 2020 at 5:32 PM EST
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The trade deal headed to President Donald trump's desk is expected to give Michigan's economy a shot in the arm..

It's called the U.S.-Mexico-Canada Agreement and it will replace NAFTA once it takes effect.

This will directly affect two of Michigan's most-important industries.

The trade agreement is designed to make sure more auto parts come from North America and to make sure the automakers can't rely on cheaper labor in Mexico.

Cars built in Canada and Mexico will have to meet the following conditions in order to avoid tariffs:

- 75 percent of the parts used must come from either those countries or the U.S.

- At least 40 percent of the car must be built by workers making a minimum of $16 an hour.

- Vehicles that don't meet those requirements will get hit with a two and-a-half percent tax if they're shipped to the U.S.

The deal is also supposed to help farmers who export more than $800 million worth of vegetables, dairy products, seeds and more to Canada and Mexico.

The State Department of Agriculture and Rural Development says having an agreement in place will allow more Michigan companies to sell there.

That includes the Canadian dairy market which has been tough for American farmers to get into.

Now with any trade agreement you have to wait a bit to see how things play out and we may not know the real impact for a few years.

Overall, Michigan exported more than $36 billion worth of products to Canada and Mexico on 2018.

The three biggest categories were transportation equipment, machinery, and chemicals.

Canada still has to approve the USMCA before it can take effect.

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