Automobiles remain a sticking point as the United States and Mexico continue negotiating a new bilateral trade agreement to replace the two countries’ existing trilateral NAFTA deal with Canada, auto industry officials have told Automotive News. Signs indicate that the two countries are close to reaching a deal, after which Canada would be allowed to rejoin trade agreement talks, but the Trump administration has held firmly to a number of harsh demands that have caused negotiations to drag on longer than expected.
Reportedly, one of those demands is the ability to impose stricter tariffs on automobiles and parts from new plants in Mexico should those imports be declared a national security threat – the same justification used by the Trump administration to place new import duties on steel and aluminum imports. Old plants would essentially be exempt from the tariffs, but the looming threat of a possible future 25-percent import duty could deter investment in the country, AN‘s sources say.
“Deal with Mexico is coming along nicely,” Trump tweeted on Friday. “Autoworkers and farmers must be taken care of or there will be no deal. New President of Mexico has been an absolute gentleman.”
Another key sticking point has been strict demands regarding parts-source requirements. AN reports that US trade negotiators have barely budged from their demands from last May that 75 percent of an automobile’s parts content must come from North America, with 40-45 percent from so-called “high-wage zones” – basically, the US and Canada.
Despite the Trump administration’s optimism regarding the bilateral trade negotiations, Mexican Economy Minister Ildefonso Guajardo told reporters Friday that “nothing is close until everything is close, but there are items in every element that is being discussed.” He said talks would resume this week, but that many issues had to be worked out before a deal could be made and Canada could rejoin the discussion.