US, foreign automakers spar over Trump's NAFTA rework

August 21, 2018

Talks between the U.S., Canada, and Mexico are expected to resume Tuesday on President Donald Trump's efforts to rework the 1994 North American Free Trade Agreement (NAFTA) between the three countries.

No matter what U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo work out Tuesday, if anything, they face conflicting opinions from Detroit and foreign automakers that build cars in the U.S.

MORE: If Trump axes NAFTA, new car prices could go up

The head of the trade group that represents Detroit's three automakers—Fiat Chrysler Automobiles, Ford Motor Company, and General Motors—said he is "encouraged by the direction of the discussions."

Meanwhile, the Association of Global Automakers that represents automakers such as Toyota, Honda, Nissan, and Hyundai voiced its opposition in a letter sent last week to select members of Congress involved in trade negotiations.

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"We remain concerned that, without further clarifications, assurances and modifications, many of those companies producing vehicles in multiple states will not be in a position to support legislation implementing a NAFTA 2.0," the letter signed by the group's president, John Bozzella, said.

Many foreign automakers conduct final vehicle assembly in the U.S., but they are more likely to source components from overseas.

The latest reports suggest that the NAFTA rework will increase the requirement of North American-made content in vehicles made in the region from 62.5 to 70 percent. Additionally, reports say that at least 40 percent of vehicle and component assembly will need to come from "high wage" places that pay workers at least $16 per hour. That would mean the U.S. or Canada, as Mexican plants don't pay as well.

About half of cars produced in the U.S. are built by foreign automakers.

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