Final US-Mexico-Canada Agreement reached with House Democrats; Phase-one trade agreement with China nearly complete

BY Alex Ayers
12/16/2019 - HVAC Government Affairs

Earlier this week House Speaker Nancy Pelosi announced House Democrats reached an agreement with the Trump Administration to pass a finalized United States-Mexico-Canada Agreement (USMCA) to replace the North American Free Trade Agreement (NAFTA). President Trump previously announced the agreement between the three countries more than a year ago, however it has taken several months of negotiations between House Democrats and the US Trade Representative Robert Lighthizer to come to a final agreement. Many Democrats were worried about new provisions relating to environmental protection, labor unions, and enforcement mechanisms.

While the USMCA did very little to change manufacturing requirements for HVACR products, the uncertainty over the future of the agreement did create tension between the respective countries that have impacted the industry. Once the finalized agreement is approved by the three nations the new trade pact will replace the still existing NAFTA and economists predict it will help to increase the already growing economy. Congress can approve the agreement through a fast track process called the Trade Promotion Authority, however with Congress expected to leave town on December 20 for the holiday recess, it is unlikely they will take it up until after the new year. In addition, if the House approves Articles of Impeachment, the Senate could be forced to wait until after a trial to take up the measure.

Shortly on heels of the announcement by Speaker Pelosi, US Trade Representative Lighthizer has announced a “phase-one” trade agreement with China has been agreed upon in principle. President Trump and Vice Commerce Minister Wang Shouwen have both signed off on the agreement moving it one step closer to being finalized. Because President Trump increased tariffs under his authority through Section 301 of the Trade Act of 1974, he will be able to implement the phase-one agreement without the need for Congressional approval, we expect to see a notice in the Federal Register released by the US Trade Representative that includes the full details of the agreement within the coming days.

Based on announcements by both countries we know the agreement will halt the planned tariff increase set to got into effect this weekend and pull back on the recently increased tariffs on consumer goods to original levels. In exchange, China has agreed to purchase $200 billion in US goods and services over the next two years including US agricultural products that have been targeted by the trade war. Additionally the Chinese government has agree to increase protections for intellectual property and further open access to China’s financial services sector. Tariffs on most HVACR products are expected stay in place until a larger agreement that includes changes to China’s industrial manufacturing policies is in place. 


We will continue to update members as we learn more about what tariffs are reduced or removed on HVACR products.

For more information contact Alex Ayers at aayers@hardinet.org.