USMCA’s Impact on the Industrial Truck Industry

Tags: Cross-border Trade, Logistics, Supply Chain

The United States Mexico Canada Trade Agreement (USMCA) is critical to ensuring a robust North American economy. The agreement, signed by the respective country’s presidents on November 30, 2018, modernizes and enhances trade relations between the three countries and is now pending ratification by each country’s legislature. Passage is crucial to maintaining a healthy U.S. manufacturing and industrial truck industry.

It’s important to consider the beneficial impacts of the trading relationship the U.S. enjoys with Canada and Mexico. They are the largest foreign purchasers of U.S. manufactured goods, and U.S. manufacturing success depends on this mature relationship. Consider these facts (source: National Association of Manufacturers):

  • Canada and Mexico alone purchase one-fifth of the total value of U.S. manufacturing output.
  • Canada and Mexico purchase more U.S.-made goods than our next 10 trading partners combined despite representing only 6 percent of the world’s population.
  • The jobs of more than 2 million American manufacturing workers depend on exports to Canada and Mexico, along with more than 43,000 small–and medium-sized businesses.

Today the powered industrial truck (PIT, i.e. forklift) industry annually exports over $900 million of equipment to Canada and Mexico duty free under the North American Trade Agreement (NAFTA). This equates to an annual trade surplus of over $400 million. It is essential to maintain this duty-free export business under the new USMCA. Without passage of USMCA, duties could once again be imposed on PIT exports to Canada and Mexico. Demand in those countries would be filled by lower cost (no duty) imports from other countries. This will negatively impact U.S. PIT manufacturers and U.S. manufacturing jobs.

The PIT market is global in nature and is very competitive. PITs are manufactured in virtually every industrialized country and are exported throughout the world. In 2018, the worldwide market for PIT was approximately 1.5 million units (source: World Industrial Truck Statistics). In 2018, the North American market was just over 277,000, the U.S. market amounted to 256,000 units, and the Chinese market was approximately 436,000 units. The EU (Western and Eastern Europe) market amounted to approximately 524,000 units (source: World Industrial Truck Statistics).

For manufacturers and workers throughout the United States, the North American commercial market is one of the most important markets in the world. Passage of USMCA will continue to support and grow higher-paying American jobs, expand manufacturing in the United States, and improve America’s global competitiveness.

The relationship with Canada and Mexico is key to the success of the forklift industry and vital to keeping America’s just-in-time inventory moving. The U.S. PIT manufacturing industry:

  • Manufactured over one quarter million units in 2018.
  • Contributes over $25 billion to the U.S. gross domestic product (GDP).
  • Supports a total of 209,000 U.S. jobs.
  • Creates two and a half additional jobs in the U.S. economy for each full-time employee in the manufacturing industry.
  • Has a greater percentage of veterans in the workforce than any other manufacturing industry.
  • Pays over $5 billion in taxes to local, state and federal governments.

The USMCA updates key provisions put in place with NAFTA, which entered into force 23 years ago. This was before major technological and energy innovations helped transform what and how we manufacture in the U.S.

The USMCA promises to modernize trade by:

  • Protecting ideas, innovations and digital property.
  • Allowing manufacturers to sell products duty-free into Canada and Mexico and making it easier for small–and medium-sized businesses to sell to both countries.
  • Creating fair competition for manufacturers with the same rules applied to U.S. and abroad.

The data provides sound evidence that the powered industrial truck market and its products are an integral part to keeping the U.S. economy moving. The USMCA is not only necessary, but critical, to maintaining and improving U.S. manufacturing.

About ITA: For more than 65 years, the Industrial Truck Association has been the leading organization of industrial truck manufacturers and suppliers of component parts and accessories that conduct business in the United States, Canada and Mexico. Based in Washington, D.C., ITA maintains an influential voice in international standards development for the industry. The organization also advances engineering practices to promote safe products, disseminates statistical marketplace information, and provides industry forums for learning and networking. Visit www.indtrk.org for more.

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