Minutes after his inauguration, President Donald Trump signaled plans to pull the U.S. from the Trans-Pacific Partnership and renegotiate the North American Free Trade Agreement, moves that analysts say could have profound effects on the automotive industry.
The announcement, posted online by Trump’s new White House team, comes after years of his blasting both trade deals as job-killers that hurt American workers and moved jobs overseas.
“With a lifetime of negotiating experience, the President understands how critical it is to put American workers and businesses first when it comes to trade,” the White House said in a statement. “With tough and fair agreements, international trade can be used to grow our economy, return millions of jobs to America’s shores and revitalize our nation’s suffering communities.”
In confirmation hearings this week, Trump’s choice to head the Commerce Department, former auto supplier executive Wilbur Ross, signaled that renegotiating NAFTA would be an urgent priority.
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NAFTA, which took effect in 1994, created a free-trade bloc linking the U.S., Canada and Mexico. The White House team said Friday that if the NAFTA partners refuse “a renegotiation that gives American workers a fair deal,” then the president will give notice of the country’s intent to withdraw.
If the U.S. makes such a move, a withdrawal from NAFTA would cost at least 31,000 U.S. auto jobs and cause vehicle prices to rise, a recent study by the nonprofit Center for Automotive Research found.
Despite the change in policy on trade from the White House, the website of the U.S. Trade Representative’s office still prominently featured the TPP and its benefits to American workers, reflecting the Obama administration’s position.
Tariff plans
Although there was no specific mention of it in Friday’s posting, Trump has repeatedly vowed to slap a 35 percent tariff on all Mexico-built vehicles sold in the U.S.
The CAR study said that would result in a loss of at least 6,700 North American assembly jobs and 450,000 units of U.S. auto sales. Because Mexican-made vehicles are made of about 40 percent American parts on average, and American-made vehicles are made of about 12 percent Mexican parts, about 20,000 U.S. parts manufacturing jobs and 11,000 U.S. assembly jobs could be lost as a result, CAR said.
Mexican officials have vigorously defended NAFTA as crucial to U.S. economic competitiveness.
Mexican President Enrique Pena Nieto, on his official Twitter account, on Friday congratulated President Trump and vowed to strengthen relations between the two governments.
