New NAFTA, making Mexico great again?

Discussion in 'Economics' started by Here4money, Aug 27, 2018.

  1. Here4money


    In recent days, U.S. and Mexican diplomats reached agreement on key elements of a new treaty, including an increase in the percentage of each car -- to 75 percent from the current 62.5 percent -- that must be made in North America to qualify for duty-free treatment.

    So what are the odds car suppliers move their 3rd world production from Asia to 1st world North America?
    tommcginnis likes this.
  2. tommcginnis


    Hey, as long as my Suby remains "Team Built In Indiana", I'm good. :D
  3. ironchef


    Are you saying that Trump may be winning the trade war with the rest of the world?
  4. Here4money


    Not really, to me it strengthens Mexico's position and increases the production cost of vehicles. From a glance, there's no prerequisite to move production to the US, just North America. I suppose it's best to improve Mexico's economy than Asia's.
    greg500 likes this.
  5. DaveV


    I don't understand. Wouldn't car makers be more likely to move production from North America to Asia under this deal? Or are you forgetting that Mexico is in North America? Besides if a car made in Mexico that does not meet the 75% minimum North American content threshold, the duty to import it into the USA is only 2.5%; Easily justified by the lower Mexican wages.
  6. Here4money


    Mexico being in North America is precisely why this is a bad deal. The deal says Mexico has to increase vehicle makeup to 75% North American. The idea being that they should stop sourcing material available elsewhere. All this does is force the supplier to move shop to Mexico to increase the quota.

    Trump's mentality is Mexico will begin sourcing from the US or Canada... This may work with steel stampings, until American/Chinese companies move stamping to Mexico
  7. zdreg


    with the agreement Trump will twitter that he was won a victory.
  8. bizkitgto


    Is NAFTA dead now since Canada has been excluded?
  9. NAFTA is as dead as North Korea's denuclearization. Trump's governing style is like the infomercial programs on late night TV. He creates a problem or breaks something, then provides a BS useless fix for it. All huff and puff.

    PS. we do need to improve our trade deals with other countries, just not unilaterally and with protectionist manner.
    Here4money likes this.
  10. DaveV


    Nope. First, the U.S. and Mexico together cannot kill NAFTA without Canada's agreement. Killing NAFTA is a long drawn out process, which probably explains why Trump did not kill it when he became president.

    Second, so far, this new deal is basically talk. It would require the agreement of Congress, who are reluctant to add any new protectionist legislation. And it probably has to be signed before the new Mexican president takes office December 1st.
    #10     Aug 28, 2018