Automakers Under Threat During NAFTA Negotations

Officials from Canada, the United States and Mexico will soon start negotiating terms for a new NAFTA agreement and automakers are likely to feel the effects more than most.

Since taking office, President Donald Trump said he would either ditch the 1994 NAFTA agreement entirely or renegotiate it to the benefit of the U.S.

Speaking to Automotive News, a senior U.S. official said the countries are looking to fast-track the signing of a new deal and are being ambitious in the first round of talks.

According to the official, the U.S. wants a “more balanced, reciprocal trade agreement that supports high-paying jobs for Americans and grows the U.S. economy.”

In the U.S.’s attempts to even up its trade deficits with Mexico and Canada, automakers will be encouraged to ignore the prospect of cheaper labor in Mexico in favor of manufacturing vehicles and parts in the United States.

One key element of the talks will be focused on NAFTA’s rules of origin where goods imported into the U.S. from Canada or Mexico are hit with tariffs, something that could impact automakers who bring manufactured parts to the United States.

“In terms of the rules of origin, the overall goal is to address concerns about doing more to incentivize and create more manufacturing and more manufacturing jobs in the United States. I think each country expects benefits for itself from those rules of origin, and I think that’s what you’re seeing reflected in our objective statement,” the official said in anonymity.