The United States-Mexico-Canada Agreement, or “USMCA” – the Trump administration’s proposed NAFTA replacement – is still a long ways off from becoming law, and the new deal could face an uphill battle as it tries to make it past Congress. So far, the response from the business community “has been relief more than satisfaction,” writes Eric Kulisch of Automotive News, and without enthusiastic lobbyists backing it, members of Congress might have a tough time deciding whether the deal is worth their support.
“There isn’t a single automaker that prefers the new rules to the old rules of origin,” a former U.S. trade official told Automotive News on condition of anonymity. “It’s simply a matter of accepting there were going to be changes, and can they live with them?”
Automobiles were a key part of the negotiations surrounding the Trump administration’s NAFTA replacement, and among the new rules proposed under the USMCA are a mandate that 75% of a vehicle’s value come from member nations, up from 62.5% under NAFTA, and that 40% come from plants paying at least $16 per hour. That latter rule could have major implications for GM’s significant Mexican manufacturing footprint.
After the U.S. government announced that the leaders of both Mexico and Canada had struck a new agreement and the details were made public, General Motors was oddly quiet about the deal, while Ford and Fiat Chrysler Automobiles each issued statements offering their support. While General Motors is most certainly contemplating the potential ramifications of the proposed changes in private, its choice not to publicly applaud the efforts of the U.S., Mexican, and Canadian governments might be telling.
Technical fixes to the NAFTA replacement are expected before the three member nations officially sign off, but the biggest impetus to passage might be if the Trump administration threatens to nullify NAFTA should Congress fail to pass the USMCA. The president has made threats like that before, although as Automotive News notes, it’s possible that the likely reaction from Wall Street would ultimately prompt Trump to reconsider.
For the latest GM-related NAFTA news, stay tuned to GMAuthority.com.