Trump ready to shake up trade deals, White House will renegotiate NAFTA, statement says:
A few minutes after its inauguration, President Donald Trump announced plans to withdraw the United States from the Trans-Pacific Partnership and renegotiate the North American Free Trade Agreement, which analysts believe could have profound effects On the automotive industry.
The announcement, published online by the new Trump White House team, comes after years of its strike from both trade agreements as job killers that injure American workers and shifted jobs abroad.
“With a lifetime of negotiating experience, the president understands how crucial it is to put US workers and businesses first in the trade field,” the White House said in a statement. “With tough and fair deals, international trade can be used to grow our economy, make millions of jobs on the shores of America and revitalize the suffering communities of our country.”
In Confirmation Hearings this week, Trump’s choice to head the Department of Commerce, former automotive service provider Wilbur Ross, reported 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 United States, Canada and Mexico. The White House team said Friday that if the NAFTA partners refuse “a renegotiation that gives US workers a fair deal,” then the president will give notice of the country’s intention to withdraw.
If the United States makes such a move, a NAFTA withdrawal would cost at least 31,000 automotive jobs in the US and lead to higher vehicle prices, according to a recent study by the Ontario Automobile Research Center.
Despite the change in policy on the White House trade, the Web site of the US Trade Representative’s office still featured the PPT and its benefits to US workers, reflecting the position of the Obama administration.
Although there was no specific mention of this in Friday’s display, Trump has repeatedly promised to slap a 35 percent tariff on all vehicles built in Mexico sold in the United States
According to the CAR study, the loss of at least 6700 jobs in assembly in North America and 450,000 units of auto sales in the United States would collapse. Because Mexican vehicles are made up of about 40 percent of American coins on average, and vehicles manufactured in America are made up of about 12 percent Mexican coins, about 20,000 coin manufacturing jobs in the US and 11,000 Assembly jobs in the United States could be lost as a result,.
The Mexican authorities have vigorously defended NAFTA as crucial to the economic competitiveness of the United States.
Mexican President Enrique Pena Nieto, on his official Twitter account, congratulated President Trump on Friday and promised to strengthen relations between the two governments.
“We will establish a respectful dialogue with the government of President @realDonaldTrump in favor of Mexico,” he wrote just after the swearing in of Trump.
“Sovereignty, national interest and the protection of Mexicans will guide the relationship with the new US government,” Pena said.
Canadian Prime Minister Justin Trudeau congratulated Trump in a statement.
“Canada and the United States have built one of the closest relations between two countries in the world. This sustainable partnership is essential to our shared prosperity and security.
“Together, we have strong trade and investment ties and integrated economies that support millions of Canadian and American jobs. We both want to build economies where the middle class, and those who work hard to join, have a chance to succeed. “
Trudeau said Canada is looking forward to working with Trump and US leaders “to restore prosperity to the middle class on both sides of the border and to create a safer and more peaceful world.”
Role to make automakers more competitive.
But trade union leaders declared before inauguration day that they hoped government negotiators would convince Trump of the value of NAFTA for the three nations and particularly the Mexican leaders in the United States and the United States. Canada have attacked NAFTA from the beginning.
US carmakers have repeatedly stressed their support for free trade agreements, although some, such as Ford Motor Co., have warned that such transactions must have protection against currency manipulation.
The new administration has also promised to crack down on countries that violate trade agreements and hurt US workers.
“To carry out its strategy, the president appoints the toughest and most intelligent of his sales team, ensuring that the Americans have the best negotiators possible,” said the White House. “For too long, trade agreements have been negotiated by and for members of the Washington establishment. President Trump will ensure that his trade policies are implemented by and for the people and will place America first.
“By fighting for just but difficult trade agreements, we can bring jobs back to the shores of America, raise wages and support US manufacturing.
Marina Whitman, an international trade expert at the University of Michigan and former chief economist at General Motors, noted that “world trade has begun to slide off the growth of overall gross domestic product, even before Trump was elected And doubled on its protectionist rhetoric on imposing punitive tariffs and tearing trade deals. “
While Whitman said NAFTA could be updated, it described Trump’s proposal as “both more drastic and more irrational, it would have a negative effect on the US economy and that of our trading partners, Especially China, Mexico, On the world economy”.
Analysis of Canada
Tony Faria, co-director of Automotive and Automotive Research at the University of Windsor’s Odette School of Business, said he was not surprised by the president’s intentions, but it was too early to What it meant to Canada.
Canada has accepted the TPP, but as Faria pointed out, “it has not been strongly supported” by the public, especially not by auto workers.
He said that Canada could also take advantage of the opportunity and withdraw from the TPP or see the withdrawal of America as a benefit.
“If Canada were part of this group and the United States was not, it would make more sense to assemble some vehicles in Canada where Canada could be a better exporter than the United States, depending on where Where you export, “Said Faria.
With regard to NAFTA, Faria has stopped to say that it could cause a trade war if Trump follows as a result of withdrawing it and implements its proposal for a “border tax” on vehicles built outside states -United.
“Any tariff that he wants to put on a vehicle from Canada to the United States, it is natural for Canada to do the same tariff on any vehicle that comes from the United States,” Faria said. “If the US has pulled out of NAFTA, we’re talking about tariffs and we ship 85 per cent of the vehicles that are built in Canada to the US The same thing happens the other way around.
“The fact remains that the vast majority of vehicles purchased in Canada are not built in Canada and the primary source is the United States.”
For example, the best-selling vehicle in Canada in 2016 was the F-Series pickup, built in Michigan and Kansas. Ford sold 145,409 trucks in Canada in 2016. John Irwin and Greg Layson contributed to this report.