Tags: Trump Administration | trump | nafta | automakers | grocers

Trump's Nafta Revamp Could Hurt Automakers, Grocers

Trump's Nafta Revamp Could Hurt Automakers, Grocers

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Friday, 24 February 2017 10:36 AM

American companies importing vehicles and their parts, electronics and fruit from south of the border would be well-advised to keep a close eye on the future of Nafta.

Bloomberg crunched the data on U.S. industries' exposure to trade under the 23-year-old North American Free Trade Agreement, looking at U.S. imports from Mexico under Nafta as a percent of total imports by value from the country.

The calculations show U.S.-based carmakers use Nafta benefits for well over 90 percent of their Mexican imports, while buyers of Mexican agricultural products such as fruits and nuts take advantage of the deal more than 80 percent of the time, both up from 1995 levels. 

These industries are probably feeling the uncertainty after Trump said he wants to re-negotiate Nafta so the U.S. can squeeze out more benefits, and that he'd withdraw from the pact if talks don't go his way.

While his administration has said little about what specifically it plans to target for change, manufacturers are particularly vulnerable if there's a move to tighten the so-called rules-of-origin requirements that limit content from cheaper producers, especially from Asia.

The demise of Nafta arguably would affect one part of the of the auto industry disproportionately: trucks. The U.S. has abnormally high tariffs on trucks from non-Nafta countries, and if the agreement fades away, more than $20 billion of the vehicles imported from Mexico could be subject to a 25 percent tariff, according to Caroline Freund, a senior fellow at the Peterson Institute for International Economics.

To be sure, some other key industries are increasingly trading outside the parameters of Nafta. U.S. importers of Mexican electronics products are using the agreement far less than before, albeit it still covers half the industry's import value, while importers of metal and furniture are weaning themselves off the pact's terms.

© Copyright 2021 Bloomberg News. All rights reserved.


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American companies importing vehicles and their parts, electronics and fruit from south of the border would be well-advised to keep a close eye on the future of Nafta.
trump, nafta, automakers, grocers
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2017-36-24
Friday, 24 February 2017 10:36 AM
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