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How USMCA Could Impact the Steel Industry

By Camille Grayson
on February 21, 2020

In January, the United States, Mexico and Canada reached a new trade deal that replaces the North American Free Trade Agreement. The new United States-Mexico-Canada Agreement (USMCA) is projected to increase U.S. gross domestic product by up to 1.2 percentage points and could create nearly 600,000 jobs, according to the International Trade Commission.

Here’s a breakdown of what USMCA could mean for the U.S. steel industry.

New incentives, safeguards for North American steel

USMCA encourages the use of steel made in North America for automotive vehicles and products. Specifically, it requires that 75% of auto components be manufactured in North America. This will incentivize Canada and Mexico to import more American-made vehicles and parts. The deal also imposes new safeguards against steel dumping.

New opportunities for American steelworkers

These opportunities for the automotive industry extend to the steelmaking industry. The deal states that by 2023, 40–45% of automotive content must be made by workers earning at least $16 per hour. This incentivizes better jobs and competitive wages for steelmakers.

New optimism for U.S. steel

USMCA has sparked newfound optimism in the steel industry. Thomas Gibson, president and CEO of the American Iron and Steel Institute, believes the new agreement represents a step in the right direction for the future of U.S. steel

“USMCA will help create jobs and foster investment in manufacturing, including strengthening our steel industry supply chains with key customers by incentivizing the use of North American steel in manufactured goods,” Gibson said.

“This will enhance the ability of our three countries to continue to work together to address the surges of dumped and subsidized steel imports that have plagued the North American steel market. These are all tremendous positive developments for the steel industry.”

Philip Bell, president of the Steel Manufacturers Association, believes USMCA will create more steel production across the continent.

“This agreement provides strong provisions on new automobile manufacturing, rules of origin content requirements, trade enforcement, labor and the environment,” Bell said. “The stronger definition of what constitutes North American steel will help ensure that more steel is made within the region.”


While the potential benefits of USMCA are still down the road, the new trade agreement should spur more production, create additional jobs and lead to higher wages for American steelworkers.

Learn more about USMCA right here.