The United States Senate voted to pass the US-Mexico-Canada Agreement (USMCA) on Thursday January 16, a bipartisan deal widely celebrated by steel executives and other industry groups.
“Through the USMCA, our job creators will continue to compete and grow as we create more opportunities to sell our American goods and services to more customers, allowing them to add jobs and spurring economic growth here at home,” Kevin Brady, The US representative for Texas' 8th congressional district and the lead Republican on the House Ways and Means Committee, said in a statement.
The Senate passed the agreement in a 89-10 vote. This follows the House of Representatives' passage of the revised agreement on December 19 in a 385-41 vote.
Steel Manufacturers Association (SMA) president Philip K. Bell applauded the Senate’s bipartisan passage of USMCA, noting that it succeeds in its goal of maintaining free trade between the three countries.
"This agreement provides strong provisions on new automobile manufacturing, rules of origin content requirements, trade enforcement, labor and the environment,” he said in a statement. “The stronger definition of what constitutes North American steel will help ensure that more steel is made within the region.”
The American Trucking Associations (ATA) weighed in on how the deal will benefit the trucking industry.
“This agreement will boost both US exports and gross domestic product [GDP], meaning more truck movements and delivering measurable returns for our industry,” ATA president and chief executive officer Chris Spear said in a statement.
In 2018, more than $770 billion worth of goods were moved via truck between the US, Canada and Mexico, and transnational trade between the three countries supported roughly 90,000 US jobs in the trucking industry, the ATA said.
Those figures are expected to increase with the implementation of the USMCA, it added.
“We can expect to see increases in exports to Canada and Mexico and a measurable increase in our [GDP] in the years ahead. Because trucks move 70% of all freight in the US, implementation of USMCA will have direct benefits to the trucking industry,” Bob Costello, ATA's chief economist and senior vice president of international trade policy and cross-border operations, said in a statement.
Steel industry members similarly praised the Senate's passage of the deal, which will now be sent to President Donald Trump to sign.
“[The agreement] will help create jobs and foster investment in manufacturing, building upon the success of [the North American Free Trade Agreement],” Thomas J. Gibson, president and CEO of the American Iron and Steel Institute, said in a statement.
Nearly 90% of US steel mill product exports goes to Canada and Mexico, the AISI said.
“For the steel industry specifically, the USMCA improves upon the original Nafta by strengthening the rules of origin for steel-intensive goods, incentivizing the use of North American steel in manufactured goods and bolstering our manufacturing supply chains with customers in the automotive, auto parts, pipe and tube, and machinery industries, among others,” Gibson said.
Steel prices in the US reached a nearly 10-year high of $45.84 per hundredweight ($916.80 per short ton) in July 2018, mainly due to the Section 232 tariffs and quotas imposed by Trump's administration in March 2018.
Fastmarkets’ daily steel hot-rolled coil price, fob US mill, was calculated at $30.75 per cwt on January 16, up by 9.7% from $28.04 per cwt one month earlier but still down by 11.2% from $34.64 per cwt one year ago.
The Institute of Scrap Recycling Industries was also optimistic about the passage of the agreement.
All three countries signed the revised agreement in December.
"The Mexican Senate has already ratified the agreement, and it is expected that the Canadian Parliament will ratify shortly after its session convenes at the end of this month. A date for implementation has not yet been set, but the latest expected date is January 1, 2021," ISRI said.