- In a year expected to be filled with Wild Cards, we believe the auto industry will be pleased with the signing of the USMCA.
- As Cox Automotive Chief Economist Jonathan Smoke notes, “The USMCA won’t lead to major shifts in the existing production and supply chain for the industry."
- However, it is a step forward and will likely prevent substantial moves away from North America and the U.S. in the future.
In a year our chief economist notes will be filled with Wild Cards, we believe the auto industry will be pleased by the progress made today with President Trump signing the new United States-Mexico-Canada Agreement (USMCA), the update to the original North American Free Trade Agreement (NAFTA).
In signing the agreement, the auto industry is one step closer to the stability it has desired for nearly three years, since President Trump moved into the White House promising to renegotiate NAFTA. In the long-horizon auto industry, trade uncertainty is a spanner in the planning works. The new-NAFTA deal will, if nothing else, offer a stable – and necessary – foundation for the auto industry to build on.
As Cox Automotive Chief Economist Jonathan Smoke notes, “The USMCA won’t lead to major shifts in the existing production and supply chain for the industry.” However, it is a step forward and will likely prevent substantial moves away from North America and the U.S. in the future.
How important is this agreement? Mexico and Canada are among the most important U.S. trading partners. Nearly 25% of vehicles sold in the U.S. last year were produced by our neighbors to the north and south, equal to all other partners combined. Here’s a list of our major trading partners and percent of vehicles each produces.
|Country of Assembly||2019* Share – Total|
|*Data is available through November 2019. No major changes are expected in December data.|
Compared to 2018, share stayed consistent and ranking for the top players are the same year over year. This ultimately means that sudden unexpected changes in trade can have widespread ripple effects for the industry since the market operates (and expects) a normal, consistent way of supplying vehicles to consumers.
Read what our analysts have said in the past about the USMCA and ongoing trade negotiations with our many trade partners.
If you would like to speak with one of the expert analysts from Autotrader, Kelley Blue Book or any member of the Cox Automotive Industry Insights team, please contact us.