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Trade Transformation: From NAFTA to USMCA and the Potential Effects on Hoosiers

So far, here’s our tally on the potential effects the new North American trade agreement, set to go to Congress in November, may have on the Indiana economy—from companies to consumers.  As is generally the case, there will be so-called “winners” and “losers”—but innovation and creativity may be an unforeseen beneficiary.

October 2, 2018

The ink is barely dry and the agreement will have to be ratified by the 3 North American countries.

  • Indiana’s economy: Canada is our largest trading partner.  ‘nough said.

  • Autos: A huge supply chain spanning the three countries has been built and tuned to remarkable precision over these past 24 year. Instead of focusing on Mexico for its lower wages, the new agreement calls for 45% of a car’s content to be built where workers earn at least $16 an hour, which either means more production in the U.S. (and hopefully Indiana) or that Mexico’s wages will go up.

  • Pharma: It should provide big benefits to drug makers in Indiana, providing for 10 years of protection from generic competition. 

  • Ag: The Indiana Farm Bureau gives a thumbs up, especially since Indiana does huge commodities trade with Canada.

  • Consumers: Increased prices on autos and drugs? Only time will tell if companies can reduce costs in other ways than wages or increased prices on steel and aluminum (tariffs, don’t you know).

  • Workers: Increases in wages should increase purchasing power, which in turn can help retailers, restaurants and services. 

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