Here Are All The Ways This New NAFTA Deal Will Hit Your Wallet

President Trump says the new deal will help American workers.

President Donald Trump’s promised NAFTA replacement deal — the United States-Mexico-Canada Agreement, aka USMCA — was reached late Sunday evening, mere hours before the Oct. 1, 2018, deadline the U.S. had set.

Both U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland issued a joint statement, which, in part, projected possible benefits of the agreement: “It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half-billion people who call North America home.”

Click to find out if you’re actually part of the middle class.

Auto Manufacturing Jobs Get a Higher Minimum Wage

The “good, well-paying” jobs are likely those in the auto manufacturing sector. In an attempt to rebalance trade treaties, the Trump administration created a provision in the new agreement that focuses on setting a minimum fixed wage level for certain employees of auto manufacturing plants. In order to shift production away from Mexico and back to the U.S., at least 30 percent — rising to 40 percent by 2023 — of car and truck parts have to be made by workers earning at least $16 per hour.

Will This Lead to More Expensive Vehicles?

The jobs created by increased production and higher wages in the auto industry don’t come without potential price increases for the American consumer. Under the terms of the new agreement, automakers won’t be able to rely as heavily on cheaper labor and also face the possibility of higher compliance costs. Citi’s global chief economist, Catherine Mann, believes that the “devils are in the details” when it comes to bringing jobs back to the U.S. as compared to just raising the cost of vehicles. ¬†

Related: New China-Imposed Tariffs Hit Tesla Hard

Consumer Drug Prices Go Up as a Result of USMCA

Other provisions of the USMCA that could affect the average American include some that favor big pharma, which would serve to drive up consumer drug prices: “NAFTA 2018 incorporates nearly wholesale the wish list of big pharmaceutical companies, with respect to intellectual property rights and drug pricing provisions,” said AFL-CIO trade policy specialist Celeste Drake in a statement.

“Measured against the status quo, public health is likely to be harmed, the prices on drugs and medical devices are likely to increase, and life-saving medicines could be increasingly out of the reach of those most in need,” Drake said.

Know: 18 Medical Expenses You Can Deduct From Your Taxes

Other Ways the USMCA Could Affect You

In addition to car and drug prices, the new deal includes measures that will impact other industries, potentially trickling down to the average consumer through supply chain impacts, consumer product prices or other ways. The Financial Times reported that the USMCA — which will run out in 16 years in 2034 — also:

  • Increases U.S. access to Canada’s dairy market
  • Preserves chapter 19 of original NAFTA allowing companies like Canadian lumber outfits to challenge emergency anti-dumping and anti-subsidy tariffs through a special panel
  • Preserves the right of the U.S. to impose emergency tariffs of up to 25 percent on cars and car parts on grounds of national security on trading partners other than Canada and Mexico

President Trump Says It’s the Most Balanced Trade Deal in US History

Despite the potential price increases U.S. consumers could be facing, President Trump remains optimistic about the deal, as he tweeted after the agreement was reached:

And during¬†Trump’s press conference on Oct. 1 regarding the USMCA, he said, “Once approved by Congress, this new deal will be the most modern, up-to-date and balanced trade agreement in the history of our country, with the most advanced protections for workers ever developed.”

Click through to read more about how Trump’s trade war will make your holidays this much more expensive.

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