USMCA Update from Bob Lighthizer

“Until recently, US auto companies sourced nearly all of their batteries overseas. USMCA changed that. Under the agreement, an automobile cannot qualify for duty free treatment unless 40 percent of the content (45 for a truck) is manufactured by workers earning at least $16 per hour. Advanced batteries of the kind that will power new energy vehicles comprise such a high percentage of the value of these vehicles that it will be almost impossible for auto companies to qualify them under the agreement without sourcing the batteries in the United States. And in order to take advantage of a longer transition time available under the agreement, most auto companies have committed to qualifying their entire North American fleet—regardless of where the vehicles are manufactured and traded.

The result we are seeing is a Renaissance in US battery production. SK Innovations announced a $2.6 billion new facility in Georgia that will open later this year. And just yesterday SK and Ford announced an $11 billion investment in Tennessee and Kentucky. Without USMCA—and the Trump Administration’s strong actions to push back against China’s unfair trade practices—this new investment and the thousands of good paying jobs that go with it would have gone to China or other low wage jurisdictions. Worker-focused trade policy works for America. More of America’s cars of the future will be built right here.”

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