How did the United States-Mexico-Canada Agreement replace NAFTA?

The North American Free Trade Agreement (NAFTA) was replaced by the United States–Mexico–Canada Agreement (USMCA) following a period of renegotiation initiated by U.S. President Donald Trump, who sought to overhaul the original 1994 pact.12

After months of negotiations beginning in 2017, the United States and Mexico reached a preliminary agreement in August 2018. Canada joined the accord shortly thereafter, and the three leaders signed the USMCA on November 30, 2018. The new agreement officially went into effect on July 1, 2020.132

Key changes introduced by the USMCA include:
* Automotive Manufacturing: To be tariff-exempt, 75 percent of a vehicle's components must be manufactured in North America, an increase from NAFTA’s 62.5 percent requirement.1
* Labor Standards: At least 30 percent of work on tariff-exempt vehicles must be performed by laborers earning a minimum of $16 per hour.1
* Market Access: Canada provided increased access to its dairy market, while the agreement preserved a specific dispute-resolution process (Chapter 19) that the U.S. had initially sought to remove.1
* Modernization: The USMCA added new regulations concerning digital technology.2