Donald Trump’s incoming administration has wasted no time setting as official policy the renegotiation of the North American Free Trade Agreement and the withdrawal from the Trans-Pacific Partnership, moves send shock waves through the automotive industry.
Until now, automakers and auto executives have been reluctant to publicly speak out about the potential consequences of renegotiating or pulling out of NAFTA because Trump’s comments on the campaign trail were not official White House policy.
But on Friday, shortly after Trump was sworn in, the administration pledged to negotiate “tough and fair” trade agreements with the goal of creating more U.S. jobs as one of its top policy issues posted on Whitehouse.gov.
“This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers,” the statement says. “President Trump is committed to renegotiating NAFTA. If our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA.”
According to the statement, Trump’s goal is “to put American workers and businesses first when it comes to trade” with the goal of returning millions of jobs to America — even though many analysts and economists say America’s lost more manufacturing jobs to China and automation than to Mexico.
On Friday, Fiat Chrysler Automobiles, General Motors, Ford and the Auto Alliance — a lobbying organization for the industry — all either declined to comment or did not respond to e-mails seeking comment.
Automakers also have been racing in recent weeks to pull any plans they have for U.S. investments and job creation off the shelf and announce them in an effort to blunt criticism from Trump for investing in Mexico.
NAFTA has contributed to a decline in U.S. manufacturing jobs, but it has led to massive automotive industry investment in Mexico and the growth of a supplier network there.
Nearly every automaker — both foreign and domestic — has built new plants in Mexico in recent years. Mexico has surpassed Canada in annual vehicle production.
Reversing those investments to build new plants in the U.S. would take years to accomplish even in a best-case scenario. Meanwhile, a large border tax, such as the 35% tariff Trump has often talked about, would cause the price of many cars and trucks sold in the U.S. to soar and could lead to a decline in industry sales and lead a steep decline in profits for automakers.
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SOURCE: USA Today, Brent Snavely