NAFTA

In a bid to leapfrog General Motors in pickup sales, Fiat Chrysler Automobiles CEO Mike Manley now claims his company’s Saltillo, Mexico assembly plant might continue cranking out heavy-duty Ram trucks after the next-generation model arrives.

Back in January, with the U.S. threatening steep tariffs on Mexican-made vehicles, FCA announced it would move Ram HD production to Warren, Michigan. The automaker promised $1 billion to Warren Truck Assembly to make it happen. Now, with a free trade agreement in place between the U.S. and Mexico, Manley says he doesn’t care where the trucks come from, so long as Americans choose them over FCA’s rivals.

Man, if you live south of the 49th parallel, you missed quite a hubbub yesterday evening. Actually, Americans likely caught a whiff of it, as U.S. President Donald Trump’s lengthy post-UN press conference Wednesday covered a lot of topics, including the one that had Canucks up in arms.

Up here in the Great White North, a country some commenters would prefer to never see mentioned (as this writer apparently mentions it ALL THE TIME), trade remains an understandably hot topic. Canada hasn’t reached a renegotiated free trade agreement with the U.S., unlike Mexico, and there’s a Sunday deadline looming to sign on to the U.S.-Mexico accord. Tick tock. Among other planks, Canada wants to protect its dairy cartel — an entity not universally loved up here, as it greatly increases the price of common food staples on store shelves. However, protecting jobs in that sector means risking jobs in the larger auto sector, a crucial industry whose vehicles Trump has threatened to tax to the tune of perhaps 25 percent. Auto parts could see a 10 percent tariff.

Canada exported $48.8 billion worth of vehicles in 2016.

Toyota, Honda, and the Detroit Three all have assembly plants in Ontario. Last night’s news conference brought nothing but worry to the nearly 200,000 people employed in the vehicle and parts manufacturing sector. What would it mean if Trump pulls the tariff trigger? And is Canada blameless in not yet reaching a deal?

President Donald Trump announced a trade “understanding” with Mexico on Monday — not to be confused with an official deal — that would lead to an overhaul of the North American Free Trade Agreement. Trump made the announcement from the Oval Office, with Mexican President Enrique Pena Nieto listening in by speakerphone.

While it’s still too early to show up in a Lockheed S-3 Viking and tell the world “mission accomplished,” the announcement is the most overt example of progress on NAFTA we’ve seen. Interesting, considering it seemed as if Trump was openly calling for its death during the meeting.

Earlier in the day, Mexican officials said trade talks with the U.S. had concluded, adding that an announcement could come later in the day. The White House confirmed the reports an hour later on its government website, with Donald Trump stating there was a “big deal looking good with Mexico” via twitter.

The threat of new import tariffs has PSA Group worried about its plan to return to the United States. Following President Trump’s proposal to levy a 25-percent tax on steel imports and a 10-percent tariff on inbound aluminum, Europe balked at the suggestion, leading to further threats of a car tariff.

Right now, the U.S. levies a 2.5-percent tax on imported European vehicles, far less than Europe’s 10-percent tariff on vehicle travelling eastward across the Atlantic. There’s a 25-percent U.S. tariff on European vans and trucks, too, which explains why crates of Mercedes-Benz van components sail into the port of Charleston, South Carolina at regular intervals.

According to Trump, any European retaliation against the proposed metal tariffs — which seem all the more likely given yesterday’s resignation of the president’s pro-free trade economic advisor, Gary Cohn — would see the U.S. ratchet up its car tariff. If the scenario comes to pass, your dreams of one day buying a new French car in America could easily be dashed.

As the U.S., Mexico, and Canada enter into the final day of the seventh round of NAFTA renegotiation talks, President Trump is offering his neighbors an incentive for signing a favorable deal.

“Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,” Trump tweeted on Monday morning.

The president’s surprise announcement of tariffs on imported aluminum and steel late last week — 10 percent on the lighter metal, 25 percent on the heavier one — sent automaker stocks tumbling. Hoping to quell fears of new vehicle price increases, General Motors and Toyota released statements claiming the bulk of their aluminum and steel flies a red, white, and blue flag.

Mexico and Canada are finally in agreement that NAFTA could use an update, not that the Trump administration gave them much of an opportunity to refuse renegotiations. However, after taking a critical look at the two-decade old agreement, representatives from all three nations have reached the consensus that it’s time for a change.

At Wednesday’s CAR Management Briefing Seminars, Colin Bird, minister-counselor for trade and economic policy at the Canadian Embassy, and Francisco Sandoval-Saqui, a Mexican trade official for his country’s Ministry of the Economy, laid out their country’s agendas for the NAFTA trade talks slated to begin in Washington, DC on August 16th.

Both countries are eager to make cross-border trade more fluid without handing an unfair advantage over to the United States. President Trump has previously accused NAFTA of being “the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country,” and immediately moved to dismantle it upon taking office. While his stance has softened over the last few months and the reins have been handed over to Robert Lighthizer, Trump has remained bullish on the issue — claiming domestic automakers are giving away U.S. jobs and income to Canada and Mexico.

Volkswagen’s sole U.S. assembly plant was spared any fallout from the company’s wildly expensive diesel emissions scandal, but the upcoming North American Free Trade Agreement negotiations could see VW throttle back its future plans for the facility.

The Chattanooga plant, which builds the Passat and Atlas, has seen $900 million in investment over the last couple of years. More models are anticipated, and the automaker said it expects the plant to reach full production by 2020. However, recent threats of an import tax to be levied on German automakers has VW brass in wait-and-see mode before sending any new models or money to Tennessee.

Call it the Americanization of Mercedes-Benz. While the German automaker has assembled C-Class, GLE and GLS models in Alabama for some time (and, more recently, Sprinters in South Carolina), recent pressure from the Trump administration has led the automaker to reconsider what goes into those vehicles.

After being characterized by President Trump as “very bad,” it’s possible other German automakers operating in the U.S. could follow Mercedes’ lead in a bid to avoid further heat.

Ildefonso Guajardo, Mexico’s senior trade negotiator, reaffirmed his position to break off talks to reconfigure NAFTA, saying his country will completely abandon talks if the United States continues threatening levies and caps on products coming in from its southern border. He said Mexico will refuse to even consider the kind of tariffs President Trump has discussed and revert back to World Trade Organization rules. Under those guidelines, the most the U.S. could impose on a Mexican product would average 3 percent.

“The moment that they say, ‘We’re going to put a 20 percent tariff on cars,’ I get up from the table,” Guajardo said in an interview. “Bye-bye.”

Since the inauguration of U.S. president Donald Trump, Canadian political and auto industry officials have taken every opportunity to highlight the economic prosperity and millions of jobs that depend on cross-border trade. And the lobbying seems to have paid off.

At a joint press conference following the first official meeting Monday between Trump and Canadian Prime Minister Justin Trudeau, the U.S. leader praised the economic ties between the two countries.

“We have a very outstanding relationship with Canada. We’ll be tweaking it,” said Trump. “We’ll be doing certain things that are going to benefit both of our countries.”

At the same time, he took a swipe at the trading relationship with Mexico, calling it “unfair to the United States.”