Mexico-U.S. deal includes Mexican auto export cap that could hurt Japanese automakers

The Japan Times

WASHINGTON/MEXICO CITY – A proposed U.S.-Mexico trade deal would allow U.S. President Donald Trump to impose punitive tariffs of up to 25 percent on imports of Mexican-made cars, sport utility vehicles and auto parts above certain volumes, auto executives and sources said Tuesday, in a move that could hurt Japanese automakers with operations in Mexico. The United States and Mexico agreed Monday to overhaul the North American Free Trade Agreement, pressuring Canada to agree to new auto trade and dispute settlement rules to remain part of the three-nation pact. But a previously unreported side agreement between the two countries would allow the United States to impose "national security" tariffs on annual Mexican car and SUV imports of over 2.4 million vehicles. The side deal would allow national security levies on auto parts imports above a value of $90 billion per year. The administration plans to announce the results of a probe into whether autos and part imports pose a national security risk in the coming weeks.

Trump's NAFTA autos goals set to collide with industry, as negotiators prepare for talks to begin

The Japan Times

WASHINGTON – The Trump administration has set a collision course with the auto industry as it launches renegotiations of the 23-year-old NAFTA trade pact this week, aiming to shrink a growing trade deficit with Mexico and tighten the rules of origin for cars and parts. More than any other industry, autos have been the focus of U.S. President Donald Trump's anger over the North American Free Trade Agreement, which he blames for taking car factories and jobs away from America to low-wage Mexico. The United States had a $74 billion trade deficit with Mexico in autos and auto parts last year, the dominant component of an overall $64 billion U.S. deficit, according to U.S. Census Bureau data. "The Trump administration has framed their NAFTA negotiating objectives around reducing the trade deficit with Mexico," said Caroline Freund, a senior trade fellow at the Peterson Institute for International Economics. "If they don't touch autos, there's no way of getting at what they want."

Automakers launch coalition to get Trump to back off trade talks, say 'we're winning with NAFTA'

The Japan Times

WASHINGTON – Major automakers, suppliers and auto dealers launched a new coalition on Tuesday to urge U.S. President Donald Trump not to withdraw from the North American Free Trade Agreement. Auto trade associations representing major carmakers, including General Motors Co., Toyota Motor Corp., Volkswagen AG, Hyundai Motor Co. and Ford Motor Co. are part of the coalition dubbed "Driving American Jobs." The group is behind an advertising campaign to convince the White House and voters that the NAFTA pact has been crucial in boosting U.S. automotive sector production and jobs. Trump has threatened to withdraw from the trade agreement among the United States, Canada and Mexico, which is heavily utilized by automakers that have production and supply chains spread across the three countries. In the most recent round of talks to renegotiate NAFTA last week, Trump proposed changes to the rules of origin for autos, which are used to determine how much of a vehicle is made in a certain place.

U.S. and Mexico reach NAFTA overhaul deal, upping pressure on Canada

The Japan Times

WASHINGTON – The United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact. Auto stocks soared and financial markets firmed on the expectation that Canada would sign on to the deal by the end of the week and ease the economic uncertainty caused by U.S. President Donald Trump's repeated threats that he would ditch the 1994 accord. But details of gains and concessions in the deal were only starting to emerge on Monday, and Trump threatened he still could put tariffs on Canadian-made cars if Canada did not join its neighbors. "I think with Canada, frankly, the easiest we can do is to tariff their cars coming in. It could end in one day and we take in a lot of money the following day," Trump said.

Trump's push for American-made could disrupt NAFTA supply chains, hike consumer prices

Los Angeles Times

Shopping for a new set of wheels at a Chevy dealership recently, Patrick Spradlin had a few priorities: a good commuter car, room for his family of five, low maintenance costs and no more than $20,000. About the last thing on his mind was where such a vehicle and each of its components -- whether engine, car seats or spark plugs -- were made. "That's not a make-or-break issue," said the 38-year-old systems engineer from Whaleyville, Md. But such details about the origin of car parts and hundreds of other products may soon take on greater importance under the Trump administration, potentially translating into significant costs for consumers like Spradlin. The issue, known in trade jargon as rules of origin, figures to be a major bone of contention as President Trump undertakes his promise to radically overhaul the North American Free Trade Agreement.