he Metals Service Center Institute (MSCI) welcomed the signing in mid-December of the United States-Mexico-Canada Agreement (USMCA), negotiated by the U.S. and Mexican governments and agreed to by House Speaker Nancy Pelosi.
“MSCI represents more than 285 companies with approximately 2,300 locations across North America,” MSCI President and CEO M. Robert Weidner III said in a statement. “This trade pact is critical to these firms’ ability to compete on this continent, and globally.” The USMCA “will preserve well-established relationships and partnerships that have expanded exports, enhanced growth, and provided well-paying jobs to millions of North American metals workers.”
Weidner says NAFTA positively impacted the metals distribution industry, fostering a $1 trillion annual trading relationship “that has benefited both businesses and consumers. Service centers and the downstream manufacturers require a strong North American production base and thoughtful and modern trade policy.”
Weidner encouraged the U.S. House and Senate, and Canada’s Parliament, to ratify the new agreement quickly.
In its written comments to U.S. Trade Representative Robert Lighthizer, when industry input was solicited in June 2017, MSCI stated that “service centers supply the metal requirements of an estimated 300,000 downstream manufacturers and fabricators. NAFTA provided the incentive to integrate the North American industrial metals supply chain, spurring innovative, value-added manufacturing that has resulted in reduced consumer costs.” Manufacturing trade with Canada and Mexico tripled between 1994 and 2019.
Most notably, NAFTA re-created the North American automobile industry into “a modern, multibillion-dollar, tri-partite, cross-border cooperative dependent on the movements of parts and semifinished vehicles across all our borders NAFTA also nurtured a broad and vigorous advanced manufacturing supply chain across North America, from companies like Bombardier and Volkswagen to 3-D Robotics.
“In the metals service industry, the overall trading relationship with Mexico is robust,” MSCI stated.
Mexico is the United States’ third largest trading partner and its second largest destination for manufactured goods exports. The passenger vehicle market provides a good example. “Mexico has overtaken Canada as our leading auto manufacturing partner and by 2020 will produce an estimated 25 percent of all North American cars. Mexican manufactured goods exports to the United States contain significant U.S. steel content, due to the integrated nature of North American steel and manufactured goods supply chains.”
Every dollar in goods exported from Mexico to the U.S. includes 40 cents of U.S. content.
MSCI found that the U.S.-Canada metal services trade relationship “is also strong and balanced. Canada is the United States’ top export market for manufactured goods generally, and also the top export market for U.S. steel products specifically. Indeed, today the United States accounts for 60 percent of Canada’s steel imports.”
So, for all the industry participants who have found trade disruptions a barrier to extrapolating current demand into future order expectations, here’s at least one piece of the trade puzzle that may soon be settled.
