Updated deal encourages more sourcing in the U.S. and stabilizes prices for building materials. By Dianne M. Pogoda
President Trump signed the U.S.-Mexico-Canada Agreement (USMCA) on Wednesday. The pact is an update of the 25-year old North American Free Trade Agreement orchestrated during the Clinton Administration, and is expected to make housing and home improvements more affordable.
While largely focused on increased auto manufacturing in the U.S., intellectual property protections and helping American dairy farmers by giving them greater access to Canadian markets, an initial analysis by Housing Wire says the trade agreement’s price stabilization for construction materials, including lumber, steel and aluminum, could help improve the housing shortage and home affordability in the U.S.
New rules of origin, which determine what percentage of components/materials of a product may be produced in a particular country, are expected to incentivize the sourcing of goods and materials in the U.S. and North America.
The deal was signed by leaders of the three North American trading partners in late 2018, refined in the ensuing year to improve labor laws and worker protections, especially in Mexico, as well as environmental laws. The updated pact was ratified by Mexico, and Canada is expected to confirm its agreement in April. The law will become effective 60 days after that.
The independent U.S. International Trade Commission last year calculated that the U.S.-Mexico-Canada deal would add 0.35%, or $68 billion, to economic growth, and generate 176,000 jobs over six years.
