‘Thriving because of USMCA’: Industry touts pact’s role

The North American free trade agreement has become the top priority for North America’s motor vehicle parts sector, with industry leaders warning that any disruption would hit jobs, investment and long-term planning across the region.

Speaking at the MEMA Aftermarket Suppliers Global Summit in Miami, Bill Frymoyer, vice president of government affairs at MEMA, told attendees that preserving the United States-Mexico-Canada Agreement (USMCA) in its current trilateral form is central to the economic health of the automotive supply chain.

A key strategy is to show how beneficial the agreement has been to all three countries, particularly to the United States, which has expressed the most amount of displeasure with the current deal.

Frymoyer said many people in Washington believe the United States has lost jobs in the motor vehicle and parts sector since USMCA took effect, but he pushed back on that view, telling the audience the industry “has gained 61,000 jobs during the time period since USMCA in 2020.”

The sector’s economic footprint, he noted, has reached about $350 billion a year, making it the largest U.S. manufacturing sector by both employment and overall size. He said that footprint has grown by about 12 per cent since the USMCA came into force.

This is “a thriving industry, and it’s thriving because of USMCA more than any single factor,” Frymoyer emphasized.

The USMCA has supported new capital spending as companies shift sourcing away from China and deeper into North America and other “more economically friendly” locations such as Mexico and Vietnam, Frymoyer added. He said some original equipment manufacturers are already moving plants back to the United States, pointing to a Stellantis plant reopening in Chicago as an example that will draw more parts production closer to domestic assembly sites.

He described that trend as part of what he called a positive story that will “accelerate if we keep USMCA in place.”

Frymoyer said USMCA also strengthens the region’s position as a “global engine,” with the agreement helping to boost exports and wages. Citing testimony from U.S. trade officials, he said exports to Mexico and Canada are up 56 per cent since USMCA and that wages in Mexico have doubled over the same period.

One quarter of the U.S. trade deficit with China has shifted to exports from Mexico, Frymoyer pointed out, saying “we’re in the region now” and calling that shift “tremendous.”

For suppliers, he said, the agreement provides certainty on duty-free treatment for a large share of the parts that move across the Canada, U.S. and Mexico borders. Frymoyer said MEMA estimates about 70 per cent of the industry’s cross-border shipments now move duty-free under USMCA rules and related tariff decisions.

He framed USMCA as “such a big part of the aftermarket supplier economic success,” especially at a time when members are also dealing with higher tariffs on steel and other inputs.

The push to defend USMCA is “an all-hands-on-deck moment,” Frymoyer said, and asked for the continued support of the supplier community.

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