On 1 July 2020 the US-Mexico-Canada Agreement (USMCA) entered into force. These are still early days and much remains to be clarified by pending rulemaking. To help reduce the risk of making costly mistakes, this article provides a checklist of recommendations to guide readers through these first weeks and months of the USMCA.
House Democrats and the Trump administration recently reached an agreement on the final text of the US-Mexico-Canada Agreement (USMCA). Once Canada and the United States have completed their ratification process, all three countries will move quickly to publish the critical uniform regulations. Company leaders must carefully follow these regulations, as they spell out new rules regarding USMCA compliance and preferential tariff treatment.
Throughout the past few months, the United States and China have levied new tariffs, increased existing tariffs and imposed ever-higher retaliatory tariffs. Now, nearly all of the two countries' enormous bilateral trade is subject to double-digit tariffs. In this era of uncertainty, company executives understand that due diligence must be based on a fulsome understanding of the threat that lies ahead. As such, corporate leaders must take proper pre-emptive action and enlist expert legal advice.
The Department of Commerce recently announced that it had formally submitted to President Donald Trump the results of its investigation into the effect of imports of automobiles and automobile parts on the national security of the United States. With this announcement, the global automotive industry was put on high alert of a potential new US import tariff aimed directly at the products that they sell.
In 2017 the United States agreed that it was time to modernise the 24-year-old North American Free Trade Agreement pact, launching months of negotiations that recently ended. When it comes into force, the United States-Mexico-Canada Agreement (USMCA) will strengthen national treatment protections for the covered financial services industry in the United States. This is set to take place throughout 2019, with the USMCA possibly coming into force in early 2020.
If the turbulence of 2018 caused business executives grief, 2019 is unlikely to provide much relief – particularly in light of the United States-Mexico-Canada Agreement. Further, Section 232 tariffs on many steel and aluminium imports are likely to continue throughout 2019, as will Section 301 tariffs on more than $200 billion worth of Chinese imports. Finally, the administration has announced its intent to start talks on new trade pacts with the European Union, the United Kingdom and Japan.
The secretary of commerce recently announced the initiation of a Section 232 investigation into the impact of uranium imports on US national security. The Department of Commerce will have 270 days to submit a report to President Trump on whether uranium imports threaten to impair national security. The president will then have 90 days to determine what action should be taken to address any adverse effects of the imports.
The secretary of the treasury recently stated that the United States was "putting the trade war on hold" pending negotiations with China to reduce the US trade deficit and address certain acts, policies and practices relating to IP rights. He subsequently clarified that his comments referred only to the proposed 25% tariff pursuant to Section 301 of the Trade Act 1974. These comments have raised questions regarding the status of the various safeguard tariffs announced by the Trump administration.
Canadian business leaders greeted President Trump's announcement that the exemptions for Canada (and Mexico) from the double-digit Section 232 tariffs on certain steel and aluminium imports will be extended. What happens next is anyone's guess, and no company should feel comforted. Company executives will need to stay well apprised of their cross-border transactions and take all necessary steps to mitigate the risk of border delays, import audits or North American Free Trade Agreement verifications.