Key Aspects of USMCA/NAFTA Regarding China:
- Article 32.10 (The "Poison Pill"): If Canada or Mexico signs a free trade deal with a "non-market" country (aimed at China), the other USMCA members can terminate the agreement with six months' notice.
- Stricter Rules of Origin: The updated agreement requires a higher percentage of regional content for vehicles to qualify for duty-free status, specifically designed to limit the use of Chinese parts.
- Anti-Circumvention: The agreement aims to prevent China from using Mexico or Canada as a "backdoor" to export products into the U.S. without tariffs.
- Investment Shifts: Despite these rules, some Chinese firms have increased direct investment in Mexico to take advantage of the USMCA's zero-tariff benefits.
