Will the USMCA be more beneficial than NAFTA for rail traffic and commerce between the US and Mexico? (Rick Paterson)

Loop Capital (Spacing)

Simplistically, we see two aspects to this. The first is with regard to the comparative detail in the two treaties. Arguably NAFTA was “better” for US-Mexico trade because the goal of the US-driven USMCA is the opposite: US onshoring of production and therefore less trade, and less international rail traffic. New rules relating to minimum wages paid to workers in auto plants—obviously targeted at Mexico—and a higher quota of US-made components in finished vehicles are examples of this. It’s arguable whether these changes are material or not in terms of rail traffic, and time will tell. The second element, which is much more important, is the removal of uncertainty. Until the USMCA was signed there was always the risk that President Trump’s itchy trigger finger on tariffs would come into play yet again, and that risk has now receded.