n_huffhines
What's it gonna cost?
- Joined
- Mar 11, 2009
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I was assured by so many people that Trump's objectives were ultimately freer trade.
https://www.investors.com/news/economy/trump-nafta-deal-trump-auto-sector/
The deal is expected to put upward pressure on U.S. auto prices to comply with the USCMA deal terms. Now 75% of auto components must come from within the trade bloc, up from 62.5%. In addition, 40% of value added to vehicles will have to come from workers earning at least $16 an hour.
"The new regional value content requirements mean that automakers will not able to source parts as freely, so there will be added costs associated with vehicle manufacturing," said Ivan Drury, Edmunds' Senior Manager of Industry Analysis. "Given that new vehicle prices are already stretched to record highs, things could take an ugly turn for consumer wallets."
Shares of General Motors (GM) and Ford (F) rose 1.6% and 0.8%, respectively, amid relief that North America supply chains won't be severed.
Yet the prospect of higher U.S. auto prices under the Trump Nafta replacement raises the odds that the Trump administration will hike global auto tariffs. Currently, the U.S. has a 2.5% tariff on imports of autos. If complying with USCMA raises costs, it makes that 2.5% tariff even less of an advantage for domestic production.
While the U.S. is in trade talks with the European Union and Japan, Trump didn't sound very flexible. "They'll make the cars in the United States or they'll pay tariffs."
"The rest of the world is looking to take advantage of us as a region," Trump said. Under the new Trump Nafta deal, "We'll be able to compete with anybody."
Trump tariffs of as much as 25% on autos forced Canada and Mexico to the bargaining table. While both countries made concessions, they largely protected current auto production.
https://www.investors.com/news/economy/trump-nafta-deal-trump-auto-sector/