#BorderTax

In the international poker game of NAFTA re-negotiations, U.S. President Donald Trump should not assume his Mexican opponent will be playing with a losing hand, an auto industry expert says.

“I’m going to be surprised if we see a heck of a lot changed,” said John Holmes, researcher at the Automotive Policy Research Centre at McMaster University in Hamilton, Ont. “The industry now is so highly integrated.”

A border tax placed on Mexican goods bound for the United States would be a worst-case scenario for struggling Volkswagen.

The automaker, which already knows a few things about worst-case scenarios, is waiting on pins and needles to see if the proposed tax prices its small cars out of the market.

Automakers are waiting with bated breath to see where the pieces land once President Donald Trump complete’s the country’s trade revamp. One proposal would see a border tax of 20 percent placed on goods imported from other countries — a move that would impact the cost of manufacturing vehicles, and buying them.

Not every automaker would see a similar financial hit. Domestic manufacturers that use a high degree of parts built in the U.S., especially those that build few models in Mexico for delivery in the States, wouldn’t see much on an impact. For those that import most or all of their U.S. fleet from foreign factories, the cost per vehicle could be enormous. Customers, of course, would need to make up the difference.

While the tax proposal might come to nothing, a recent study shows what consumers could expect to see on window stickers if the idea becomes policy.