Trump administration demands in NAFTA trade negotiations for pushing auto jobs back to the country may not be enough to spark a shift in where car manufacturers build cars and trucks.
New math to determine what qualifies as vehicle content, what limits apply to permit tariff-free auto imports and how long companies would have to adhere to terms under a new NAFTA agreement will likely not move the needle for Detroit automakers in general, industry executives and supply chain experts stated.
Automakers are not likely to uproot billions of dollars of investments in plants and supply chains. And those that cannot adhere to standards for passenger cars could just pay tariffs of around $800 to $900 every vehicle and buy low-cost parts from Asia to offset the cost, industry experts stated.
“Broadly speaking the (tariff) increase isn’t big enough to make a wholesale change,” stated Mark Wakefield, head of the North American automotive practice for consultancy AlixPartners. “No one is going to shut down an active factory in Mexico and build a new one to replace that in the U.S.”
Tough U.S. proposals on autos are supposed to bring back U.S. manufacturing jobs and central to the Trump administration’s approach to renegotiating the North American Free Trade Agreement (NAFTA) between the associated countries.
General Motors is soon to be the sole Detroit Three automaker building pickup trucks in Mexico, is positive it could comply with content standards for trucks the United States proposes without shifting production, a person knowledgeable with the company’s plans stated.
