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The U.S. Automotive Industry: Its Value

The automotive industry plays a huge role in the U.S. and North American economies, highlights the White House Trade Representation (USTR) in a report.

In the United States, the automotive industry contributed more than $700 billion to the U.S. economy in 2021 and accounted for more than one-tenth (11.4%) of that nation’s total manufacturing output.

According to sources referenced by USTR, the automotive industry is responsible for 10.3 million direct and indirect U.S. jobs (approximately 8% of total U.S. private sector jobs).

Specifically, each additional U.S. automaker job creates nearly 11 additional jobs upstream (e.g., the U.S.-MexicoCanada Agreement (T-MEC) and its predecessor, the North American Free Trade Agreement (NAFTA)), have played an important role in the industry’s success, says USTR.

The duty-free treatment accorded to originating vehicles and parts has helped integrate North American production, and the agreements’ rules of origin have encouraged increased investment in North American automotive production.

As a result, the industry reports that total automotive trade (imports plus exports of vehicles and parts) is the largest component of total North American trade, accounting for 22% of total trade under the T-MEC.

Automotive Industry

The roots of duty-free trade and North American integration of the automotive sector date back to the Canada-U.S. Automotive Products Agreement (“the Automotive Pact”), signed in January 1965.

In 1989, the U.S.-Canada Free Trade Agreement came into force, which further expanded duty-free trade between the two countries.

Subsequently, in 1994, NAFTA entered into force, adding Mexico to the free trade bloc and effectively replacing the Auto Pact and the U.S.-Canada FTA.

On January 29, 2020, the President of the United States signed the T-MEC Implementation Act, and the T-MEC entered into force on July 1, 2020.

 

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