How the USMCA is Going to Impact Shipping

Posted by World Trade Distribution
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Filed Under: Container Freight

Recently, representatives from the major North American powers (the United States, Mexico, and Canada) met to discuss the future of free trade across the continent. They came up with is called the United States Mexico Canada (USMCA) agreement. This agreement serves as a replacement for its predecessor, the North American Free Trade Agreement (NAFTA). The USMCA was formally signed into law by President Trump. Therefore, the agreement is in full effect. It is important for everyone in the shipping, warehousing, and freight management industries to understand this agreement and the impact it will have on the industry moving forward.

Comparing and Contrasting the USMCA to NAFTA

In many ways, the USMCA is very similar to NAFTA. NAFTA went into effect back in 1994. Many of its rules, procedures, and products are present in the new agreement as well. Those who have looked closely at the deal say that there are going to be some changes when it comes to the environment and labor. Most think the agreement is going to be helpful because it incentivizes the production of domestic cars and trucks. This should reduce the frequency of international exports, meaning that more production is going to take place in the United States. This should lead to an increase in domestic shipping. 

The Protection of Intellectual Property Under the USMCA

Furthermore, this is the very first trade plan that looks at protecting intellectual property. While the impact of this clause on the freight management and shipping industries is unclear, it does set the stage for what is going to happen with the Chinese trade agreement. There are still negotiations taking place with the Chinese, where the protection of intellectual property is a much bigger deal. If this clause proves to be a sticking point with the Chinese, this might end up impacting international imports and exports even further.

Analyzing the Overall Impact of the USMCA

In the end, there is a consensus among analysts regarding the impact of the USMCA. It should open markets for farmers and manufacturers, increase the goods produced and shipped throughout the United States. Furthermore, the trade barriers between the United States and other nations should also be reduced, helping to make the shipment of goods internationally significantly easier. Finally, having a trade agreement in place helps to ease the uncertainty of markets all over the world. Look for the various sectors of the economy to respond with increased production and trade. This should lead to an increase in the demand for shipping, freight management, and warehousing solutions all over the world.

Looking to the Future

Freight transportation and business companies all over the world are already applauding the signing of the USMCA into law. Recently, the Institute for Supply Management’s business report posted one of its lowest readings in recent history. Many people have attributed this to the delay in the signing of the USMCA. Experts are projecting that US exports to Canada and Mexico will increase by $33 billion when compared to the NAFTA baseline. This is good news for the industry as a whole.

Feb 06 2020

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