USMCA vs NAFTA, explained with a toy car

which of the following statements is true of nafta? This is a topic that many people are looking for. is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, would like to introduce to you USMCA vs NAFTA, explained with a toy car. Following along are instructions in the video below:

“Is a 1993 chevy suburban and this is a 2018. Chevy suburban the 1993 one one cost. 21000 brand new and 2018 none costs. 47000 but if we adjust the for.

Inflation nthe. 1993 suburban would. Cost 42000. Today.

Even. Though the 2018 model comes with modern nfeatures like a back up camera remote engine. Start and ya know airbags the cost hasn t nchanged much in 25 years. It s not just the suburban.

The average nprice of new cars has risen only 7 since the early 90s while the price for almost all other goods nhas increased by 86 . And that is thanks to nafta the nations of north america are ready strengthened by the explosion of growth nand trade to recognize that there is no turning back nfrom the world of today and tomorrow when the north american free trade agreement ntook effect in 1994. It was the first major trade deal of its kind the us canada and mexico agreed to eliminate ntariffs which are taxes on most imported and exported goods. The countries hoped it would increase investments nand that by strengthening mexico s economy.


It would slow illegal immigration. The trade agreement benefited the nauto industry in particular. It allowed automakers to keep costs down because cars and auto parts could be traded for free well for the most. Part if at least.

625 of a car s parts were nsourced from north america. It would be tariff free cars that didn t meet the requirement or. Nwere made overseas would be slapped with a 25. Tariff nafta also gave automakers the ability to nsource cars where costs were lowest by comparison a car made in.

Mexico costs n 1200. Less than one built in the us because labor and the parts are cheaper as an industry. We ve kind of performed some economic nmiracles when it comes to keeping cars affordable by being able to. Source some of those 30000.

Parts nfrom. You know the least expensive places. Let s take this model of a. 2014 ford mustang nfor example it s engine was built in the us.


But it s nmanual transmission came from mexico. It s impossible for a consumer to easily nfind out where each individual part came from but it s likely the doors were molded nin canada the speedometer came from germany or china. Which was assembled in the us. But then sent to canada to be installed into the dashboard the seatbelts did come from a company in japan.

But the seats were probably made in mexico the tires. Most likely came from south nkorea in the end the 2014 mustang was built in ndetroit. But with only 65 of its total parts sourced from north america. It made the tariff cut and ford is in no way.

The only company who ndoes this about three quarters of the cars sold in the nus meet the standards to avoid tariffs including most cars produced by the top four auto brands. The us is actually producing more cars now nthan before nafta same for mexico and canada. But you wouldn t know that if you listened nto politicians nafta was a mistake. The single worst trade deal ever made nby any country anywhere in the world instead of creating jobs.

Nafta cost us njobs in the auto industry alone a third of us nauto manufacturing jobs have disappeared since nafta was signed as the same types of jobs have grown in mexico. But in reality. That may have less to do with nnafta and more to do with automation researchers have found that fewer than 5 nof us jobs lost from sizable layoffs can be blamed on trade with mexico but the timing of these manufacturing layoffs nin lots of different industries made it easy to point the finger at nafta so while most americans think the trade deal nwas good for the us those that feel they were directly affected are passionately against nit and this opposition is why president trump nis. Following through on a campaign.


Promise a brand new deal to terminate and replace nnafta called usmca it sort of just works mca. But this isn t a much of a new deal. While it s essentially a re branding of nnafta. It does make one major change to the auto industry.

Because it would require cars be made with n75 north american sourced parts and that 40 45 of those parts must be made nby workers who earn at least 16. An hour at least 46 and as many as 125 cars. Sold. Today that aren t taxed under nafta wouldn t qualify under the proposed usmca regulations our 2014 mustang likely wouldn t meet the nnew requirements so if it is implemented auto manufacturers nwill have to decide to just pay the 25.

Tariff or change how they manufacture their cars nsold in north america. Even if it increases production costs. And how many parts are on every car. It starts ngetting out of hand fast prices of those cars could go up anywhere nfrom 470 to 2200 dollars in.

The us. And at. These. Higher prices.


Roughly. 60000. Nto. 150000.

Fewers cars. Would be sold in the us each year. That would mean job losses. I don t want to see our companies leave nand fire our workers those days are over.

But the usmca could actually incentivize car ncompanies to leave north america nafta made us car companies more competitive nwith. The global market and even attracted foreign car companies to build in north america. And if those cars are going to face higher ncosts of manufacturing and tariffs their production might get moved to china or other ncountries building. A car with thousands of parts is nan.

Incredibly complicated process. So while nafta has kept cars pretty cheap. Nto produce the usmca could change that ” ..


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