First Impressions of USMCA Given by Trucking Industry

The United States-Mexico-Canada Trade Agreement (USMCA) came into effect in 2020 to replace the North American Free Trade Agreement (NAFTA) that had been in place since 1994. The NAFTA sparked much debate over whether it truly benefitted US trade or not, many speculated that it contributed to inflation and trade deficits. Shortly before USMCA came into effect, the American Trucking Associations (ATA) President and CEO Chris Spear welcomed the new agreement, predicting that it would “spur new production and trucking activity throughout the continent, which will benefit US trucking operations”. Now that the agreement has been in effect for two years, we will look at the first impressions of the USMCA given by the trucking industry.

Initial impressions of USMCA expressed via webinar

In a webinar held by the International Road Transport Union (IRU) several weeks after USMCA was brought into effect, North American industry leaders including Derek Leathers, Vice Chairman, President and CEO of Werner Enterprises (USA), Jorge Casares López, General Director of Alianza Trayecto (Mexico) and Dan Einwechter, Founder and CEO of Challenger Motor Freight (Canada), were brought together to discuss their first impressions of the agreement.

Derek Leathers of Werner Enterprises shared that he believed the agreement would facilitate improvements in efficiencies and allow for international trade to focus on reducing the environmental impact of shipping.

Jorge Casares López of Alianza Trayecto expressed that there may be benefits for all nations involved in the agreement, such as a strengthening of partnerships between members.

Representatives from all three regions were generally optimistic that the new agreement would benefit international trade between the nations. Dan Einwechter reminded that 40% of Canada’s GDP relies on trade with the US, making the USCMA very important for the nation’s economy.

Recent conflicts have not hindered car manufacture in Mexico

In the initial two years that the agreement has been in effect, it is difficult to measure exactly how much USMCA has benefited each of the participating nations, although reports so far give a positive outlook for all regions.

Reports suggest that although there has been a level of uncertainty for the automotive industry due to full implementation of the tariff-free requirements, which are stricter than for NAFTA, coming into action in 2023, USMCA has had the effect of boosting manufacturing in the automotive industry in Mexico. While we cannot fully predict how car exporting will continue from 2023, it seems that Mexico is preparing to make further progress regardless of recent conflicts between the US and Canada/Mexico regarding tariffs.

This will come as some relief to the trucking industry given that millions of vehicles cross the border from Mexico to the US each year, accounting for 15% of the US automotive industry and driving demand in the truck freight sector.

Will the future of the USMCA be bright?

As we move forward with the USMCA, the full implications of the benefits as well as the limitations will come into focus. Overall, the first impressions of the agreement given by the trucking industry have been positive. While there may be some challenges on the horizon, such as disagreements over tariff-free requirements in the automotive industry, it is believed that the agreement will continue to benefit the trucking industry due to the relaxed trade restrictions between Canada, Mexico, and the United States the USMCA has brought in.

Sweet Tips from Ally:

The USMCA changes support the U.S. in pushing for local product sourcing and manufacturing growth. This agreement touches various industries like factories, agricultural products, and manufacturing facilities, helping companies in those sectors as well.